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Union Bank of Nigeria Shareholders Meet to Restructure Balance Sheet

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  • Union Bank of Nigeria Shareholders Meet to Restructure Balance Sheet

Shareholders of Union Bank of Nigeria Plc will meet next Tuesday to restructure the bank’s balance for optimum performance.

Specifically, the board of directors of the bank is asking the shareholders that subject to the confirmation of the Federal High Court, the company’ s issued share capital (including for this purpose its Share Premium Account) be reduced by the sum of N54.458 billion which has been lost or is otherwise unrepresented by available assets and that the credit arising from the reduction be used to eliminate the retained loss in the company’ s audited financial statements as at 31st December 2018.”

The directors are also asking that they be authorised to do all acts and things and to approve, sign and/or execute all documents which in their opinion may be necessary, expedient or appropriate confirmation from the Federal High Court.

In a notification to the Nigerian Stock Exchange (NSE) Thursday, Union Bank explained that a review of its financial position as at 31st December 2018 established a deficit of N54.458billion as accumulated permanent losses from legacy transactions, in addition to the N247.868 billion approved by shareholders, in 2017.

It said the balance sheet restructuring proposed will not affect the bank’s authorised or issued share capital or regulatory capital but should result in a reduction of the credit balance in the bank’s Share Premium Account, while leaving the aggregate shareholders’ funds unchanged.

“It would have no impact on the bank’s creditors but rather, pave the way for the bank’s investors to receive dividends out of the bank’s future profits,” it stressed.

Consequently, the board of directors is proposing a reduction of N54.458 billion from the Bank’s Share Premium Account of N187.091billion, pursuant to sections 106 and 107 of Companies and Allied Matters Act (CAMA).

“The reserve arising from the reduction of capital would be used to eliminate the negative retained earnings as at 2018 full year end,” Union Bank said.

Meanwhile, trading at the stock market remained bearish as the NSE All-Share Index declined 1.3 per cent to close at 30,527.07, while market capitalisation shed N179.1 billion to close at N13.4 trillion.

However, activity level was mixed as volume traded declined 11.7 per cent to 217.2 million units while value traded advanced 106.7 per cent to N5.8 billion. The top traded stocks by volume were Guaranty Trust Bank Plc (82.8 million units), Zenith Bank Plc (36.0 million units) and United Bank for Africa Plc (8.0 million units).

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

Flour Mills Posts Strong Half Year Results Despite Headwinds

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flour mills posts 184% increase in PAT

Flour Mills of Nigeria Plc recorded strong performance in the Half Year (H1) ended September 30, 2020.

In the 2020/21 half-year results released on Tuesday through the Nigerian Stock Exchange, the leading integrated food business and agro-allied Group, grew revenue by 31 percent year-on-year from N270.8 billion posted in the half-year of 2019/20 to N355.1 billion in the period under review with second-quarter growth of 47 percent when compared to last year second quarter.

Similarly, the Group’s profit before tax grew by 60 percent year-on-year from N8.6 billion in H1 2019/20 to N14.6 billion in H1 2020/21 with an impressive 160 percent growth from the second quarter.

The strong performance continues across the board as profit before tax was driven by the agro-allied segment, which realised a profit of N6.3 billion when compared to the loss posted in 2019/20 period. The company said it recorded strong improvement in edible oils and fats, protein and fertiliser businesses after its investments over the years started yielding results.

Profit after tax grew by 68 percent from N5.9 billion achieved in H1 2019/20 to N9.9 billion in the period under review.

According to the company, despite economic uncertainties and headwinds, the Group has continued to show sustained growth in key areas with the agro-allied unit leading with a strong result in edible oils and proteins.

Speaking on the performance, Paul Gbededo, the Managing Director and Chief Executive Officer (CEO) of the company, said “with this result, our business has once again shown its resilience, by following the path of sustainable growth despite the prevailing challenges in both the local and global economy.”

He further stated that “in line with our vision to continue to grow value for our investors, Management will for the remaining part of the financial year continue to concentrate on improving operational effectiveness through accelerated strategies for Group-wide cost optimisation, which will ensure sustainability in the current market climate, while we will continue to invest in growing the business further.”

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US Banks Led the Most Fined Financial Institutions in 2020

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global banking

US Banks Are The Most Penalised Financial Institutions in 2020 Financial Year

Banks in the United States were the most fined financial institutions in 2020, according to the latest report from Finbold.

Finbold, a company that specialises in financial data, said three countries accounted for 97.32 percent of the total fines levied on banks in 2020.

The data revealed that United States banks are the most fined at €9.15 billion. This was followed by Australian banks with a combined €770 million, while banks in Israel came third with €762.97 million.

Also, while the fines are likely to increase before the end of the year, the total fines levied against financial institutions globally stood at €11.61 billion as of October 22nd.

Further breakdown showed Swedish banks came fourth with €456.18 million fines while German banks that incurred a combined €169.01 million fines came fifth.

The report showed Goldman Sachs led the most fined bank with €5.26 billion for various violations of regulatory rules.

Wells Fargo came second with €2.53 billion while Westpac Bank in Australia and Hapoalim emerged third and fourth with €770 million and €762.97 million, respectively.

Other heavily fined lenders include Swedbank from Sweden fined €360 million and Germany’s Deutsche with €126.52 million fine in 2020 so far.

Speaking on banks’ fines, Oliver Scott, Chief Editor, Finbold, said “Notably, the tally of bank fines is likely to increase in the coming years as European and Asian regulators catch up with U.S peers who are considered more aggressive. However, banks are looking for means of minimizing fines. Analysts have been of the opinion that the fines could have been avoided if banks leverage technology through the deployment of perfect software.”

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Guinness Nigeria Explains Reason for N12.6 Billion Loss in 2020

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Guinness

Guinness Nigeria Speaks on 2020 Poor Performance

Guinness Nigeria Plc has blamed the challenging business environment amid COVID-19 restrictions that led to the closure of bars, clubs, lounges and restaurants for its 2020 losses.

Mr. Baker Magunda, Managing Director/CEO, Guinness Nigeria, who spoke on the company’s performance in 2020, said the aforementioned represents a major part of the company’s consumption, adding that restriction imposed on gathering impacted the usual demands for celebratory occasions.

He explained that demand was weighed upon by a decline in consumer income, rising unemployment rate due to the shutdown of large corporations, surged in VAT and excise throughout 2020.

According to him, distribution was affected by the ban imposed on inter-state travel despite collaborating with regulatory authorities to minimize the negative impact on the company.

Here is a breakdown of the Guinness Nigeria performance in 2020 Financial Year

Guinness profit plunged by a massive 129.1 percent to -N12.6 billion in the 2020 Financial Year (FY), down from the N5.5 billion profit achieved in 2019 (FY). While the company’s gross profit nosedive by 16.9 percent from N40.13 billion posted in 2019 to N33.33 billion in 2020.

The company decline was broad-based as revenue also declined from N131.5 billion filed in 2019 to N104.4 billion in the 2020 financial year.

Accordingly, administrative cost rose from N9.9 billion in the 2019 financial year to N14.3 billion in 2020. However, the cost of sales moderated by 22 percent from N91.4 billion posted in 2019 to N71.1 billion in 2020.

Finance cost expanded from N2.6 billion in 2019 to N4.5billion in 2020 while finance income declined to N301 million in the year under review, down from N750.9 million in 2019.

Mr. Baker Magunda, said “The last quarter performance of fiscal 2020 was significantly impacted by restrictions due to COVID-19, exacerbating the already challenging economic environment. Closures of on-trade premises (bars, lounges, clubs, and dine-in restaurants), which represents the major part of the consumption occasion for our products and bans on celebratory occasions, impacted sales.

“Demand was also impacted by reduced consumer income, unemployment concerns due to the shutdown of a large number of businesses, and increases of VAT and excise throughout the year.”

Speaking further Magunda said, “Distribution was impacted by the ban of inter-state, and in some cases intra-state travel. Although, Management worked diligently with regulatory authorities to minimize the impact, this hampered our distributors’ ability to restock and have our brands available for purchase.”

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