CBN Instruct Banks to Implement IFRS9

The Central Bank of Nigeria has asked commercial banks to implement the International Financial Reporting Standard 9 on or before January 1, 2018 deadline.

The Director, Banking Supervision, CBN, Ahmad Abdullahi, stated this at a breakfast roundtable organised by the Risk Managers Association of Nigeria, in collaboration with Olisa Agbakoba Legal Limited in Lagos.

Abdullahi said that all Deposit Money Banks were expected to commence parallel run of a new loan impairment system from July 1, 2017 in order to ensure a seamless transition to IFRS 9 by January 1, 2018.

“We have less than six months to the effective date of the standard (IFRS 9) and many banks have to intensify efforts to meet the deadline,” the CBN director said.

“The IFRS 9 would not bring the desired benefits if it is not effectively implemented and applied consistently; with less than six months to the effective date, all hands have to be on deck,” he added.

At the roundtable, RIMAN inaugurated a work group on laws relating to credit and risk administration, non-performing loans and related issues in the nation’s financial system.

The work group, which was inaugurated by the President of RIMAN, Mr. Jude Monye, consists of RIMAN members from the financial services sector, CBN, Nigeria Deposit Insurance Corporation and lawyers.

According to Monye, the group is mandated, among other things, to facilitate, review, participate and promote initiatives towards strengthening the laws relating to credit administration, risk management and debt recovery in the country’s business environment and recommend necessary reforms.

While welcoming the participants, the RIMAN president said, “We are looking at the NPL and the IFRS9. The IFRS9 is not just for financial institutions, it is for companies that want to go global. A lot of institutions have really not migrated into the IFRS9. The IFRS9 talks about how loan provisions are accounted for in annual report whether performing or non-performing.

“It is not about banks alone, energy sector also gives out credit and it also goes bad. In relation to that is the Private Asset Management Company that the government has to put in place.

Partner, Corporate and Commercial Law, Olisa Agbakoba Legal Limited, Bisi Akodu, examined the framework on PAMCs and identified legal issues as one of the major challenges it would likely face.

Source: Punch

GTBank Celebrates 10th Anniversary of GDR Listing

Guaranty Trust Bank Plc is celebrating the 10th anniversary of its listing on the London Stock Exchange.

In a statement on Sunday, the lender said it became the first Nigerian bank to be listed on the LSE a decade ago, and the first to dual list on an international exchange as well as the first Nigerian company to raise international capital using listed global depositary receipts.

To mark the feat, the Managing Director/ Chief Executive Officer, GTBank, Mr. Segun Agbaje, led the market open ceremony at the LSE on Friday, accompanied by senior representatives of the bank and other institutional partners.

The LSE is a diversified international exchange that offers international business, and investors, unrivalled access to Europe’s capital markets.

Since its listing on the LSE, GTBank said it had embarked on a decade of growth in profitability, products and service delivery.

Agbaje was quoted to have said, “To be listed on the London Stock Exchange, one of the most illustrious exchanges in the world, was a pioneering feat which remains fresh in our minds.

“We are deeply grateful to all our investors and partners for the integral role they played and their confidence in our ability to pull off that giant leap. Ten years on, we remain committed to maximising shareholders’ value and delivering superior and sustainable return, guided by our founding values of hard work, discipline and integrity.”

FG Begins Consultations with States, NASS on Luxury Tax

The Federal Government has commenced discussions with state governments and members of the National Assembly on the framework for the implementation of the planned taxes on luxury items.

The Minister of Budget and National Planning, Senator Udo Udoma, who confirmed this in Abuja, said this was part of measures aimed at ensuring a smooth implementation of the planned tax regime.

He attributed the delay in implementing the new VAT regime to the current consultations, noting that Nigerians would soon know the items to be taxed as luxury goods.

He said since the bulk of revenue from VAT was allocated to the state and local governments, their input was vital for the new tax regime to be successful.

Based on allocation from the Federation Account Allocation Committee, the Federal Government gets 15 per cent of VAT revenue, while the states and local governments get 50 per cent and 35 per cent, respectively.

He said the Federal Government was determined to implement the taxes on luxury items, adding that this would help shore up the much needed non-oil revenue for the country.

Udoma said, “The issue of luxury items has been on for quite some time but the thing about VAT is that it needs a lot of consultation with the National Assembly and the state governments and indeed the bulk of the revenue generated from VAT goes to the states.

“The reason for the delay in implementation is because most of those consultations are ongoing. It’s not easy to agree with everybody on what should be a luxury item and what is essential but we are on it and I accept that really, we should move much faster in terms of implementing that.”

On specific strategies to boost government revenue, he said that the objective going forward was to enhance oil revenues and accelerate non-oil revenues.

This, according to him, will be achieved through transition from the traditional Joint Venture Cash Call budget to the self-funding mechanism.

Udoma added that the government was improving tax and customs administration, including greater deployment of appropriate technology to block revenue leakages.

Others are tightening tax exemptions, including duty waivers, review of the Value Added Tax rate commencing with the luxury items.

Foreign Investments Rose by 45% in 2016 — UNCTAD

Foreign Direct Investment to Nigeria rose to N4.4bn in 2016 despite the contraction of the economy and general decline in investment in Africa.

This amounted to an increase by 45 per cent from N3.1bn total foreign investment recorded in 2015, findings by the United Nations Conference on Trade and Development revealed.

The UNCTAD, in its recent report, said this improved investment in Nigeria boosted the performance of West Africa by 12 per cent to $11.4bn in 2016.

Despite the improved investor interest in the economy in the year under review, analysts at the UNCTAD posited that the FDI to Nigeria performed below average compared to previous years.

In terms of investment outflows, the World Investment Report 2017 of the UNCTAD indicated that  Angola had the highest; followed by relatively low outflows in South Africa and Nigeria.

A total of $18bn was recorded as outward investment from Africa, with Angola accounting for $10.7bn, South Africa, $3.4bn; and Nigeria $1.3bn.

“The reduced investments from South Africa, the Democratic Republic of the Congo, Ghana and Nigeria, in that order, were offset by the rise of outflows from Angola, the region’s largest investor,” the organisation said.

It noted that low commodity prices, especially crude oil prices, had diminished economic prospects in Sub-Saharan Africa and investor interest in the sub-region.

However, the report said there were expectations that the FDI flows to Africa would increase moderately in 2017 on the back of modest oil price rises and a potential increase in non-oil FDI.

Basically, the report said, “Nigeria’s FDI remained relatively depressed, as its oil output declined to historic lows in 2016, and the country fell into recession for the first time since 1991.

“The FDI to Angola, the largest FDI recipient on the continent, was subdued. Despite some recovery from its 2015 lows, the FDI to Nigeria and South Africa remained well below past average.”

“Multinational enterprises from developing economies are increasingly active on the continent, but those from developed countries still hold most of the foreign investment stock, “it added.

Dollar Flow, Foreign Investors to Support Naira

The naira is forecast to trade in a narrow range in the coming days, and is expected to get support due to dollar inflows from the Central Bank of Nigeria and offshore investors.

The local currency was quoted at 364/dollar on the black market on Friday, slightly firmer than 368 last Friday.

At the official interbank market the naira has stuck around 305.90/dollar since August 2016.

On the CBN Investors and Exporters FX window, the local currency was quoted at 367 to the dollar on Friday, Reuters reported.

The cedi is expected to firm, lifted by dollar inflows from investors interested in buying a five-year Treasury bond, helped by renewed investor confidence after the Ghana Central bank cut its policy rate this week.

The local unit recovered this week after losses in mid-July triggered by comments by President Nana Akufo-Addo that Ghana would not extend its $918m IMF aid deal beyond April 2018.

Meanwhile, Uganda’s shilling and Zambia’s kwacha are forecast to weaken against the dollar in the next one week, according to traders.

Kenya’s shilling is expected to hold steady in the next one week, and traders said they anticipate the central bank to sell dollars to keep it from weakening further.

Specifically, the Ugandan shilling is forecast to weaken due to dollar demand from the energy sector.

FG to Sell Warri, Kaduna Refineries

There are indications that the Federal Government will sell two of its three crude oil refineries that are found to have become commercially unviable as part of measures to boost the nation’s refining sector.

The two refineries likely to be sold, according to a report of the Nigerian National Petroleum Corporation obtained by our correspondent on Friday, are the Warri Refining and Petrochemical Company and the Kaduna Refining and Petrochemical Company

The NNPC said last week that the consolidated capacity utilisation of the three government-owned refineries dropped to 23.09 per cent in May, from 24.59 per cent in April.

The third refinery being managed by the NNPC is the Port Harcourt Refining Company.

Although the Ministry of Petroleum Resources, in the new National Petroleum Policy approved by the Federal Executive Council, said the government aimed to make the refineries successful and commercially viable enterprises, it stressed that government was ready to sell any of them that failed to meet respond promptly.

It said, “They will be encouraged to become so and will be supported as much as it is within the government’s ability to do so. Each refinery will be given a transition period in which to set themselves up on their own feet.

“Ultimately though, if a refinery fails to make the transition and become commercially viable, the petroleum policy is for the government to divest (sell off), grant a concession or if necessary, close down any non-performing government-owned refinery. In either instance, the site may be handed over to a suitably qualified private sector developer to build a new refinery facility on the same site.”

According to the policy document, of the three NNPC refineries, Port Harcourt is expected to be the best place to succeed.

It said, “It has installed its own independent gas-fired power supply; it has undertaken its own turnaround maintenance; it is close to jetties and the pipeline length from crude oil suppliers is short (less of a pipeline security risk), and it is operationally ready to produce refined products to international standards, although the cost structure is still not right.

“Of the three, Kaduna is perhaps the least ready currently because of its distance from crude oil supplies and reliance on a poorly maintained crude oil pipeline.”

The government described a strong refining sector as a basic requirement for the achievement of the vision of converting the nation’s economy from a crude oil export to an oil product and derivative value-added economy.

It said without strong, high volume and commercially viable refineries within the country, the whole vision would not be achievable.

The government noted that the refineries had been underperforming for many years, stressing the need for the refining sector to undergo fundamental reform so that it could play its central part in economic development.

According to the policy document, steps that the government will take to encourage the development of a viable refining sector in the country include making the NNPC refineries become autonomous profit centres and returning storage depot assets to the refineries.

It said under the restructuring of the NNPC, the refineries would be set up as independent profit centres with responsibility for their own commercial operations.

The government noted that the storage depots were originally part of the refineries but had been subsequently transferred from the refineries to Pipeline and Product Marketing Company.

It said, “This arrangement is not considered to have been successful. The PPMC has failed to manage the depots effectively and the refineries have been denied an important part of their assets. The storage depots will, therefore, be returned to the refineries.

“In addition, the perimeter fence around the refineries will be set sufficiently far from the operations including depots to ensure that proper security can be maintained. Everything inside the perimeter fence will belong to the refinery solely and will be on each refinery’s asset register.”

The government said as part of their new independence, each of the refineries would be given commercial autonomy, meaning that they would be free to take crude oil from wherever they could get it.

Source: Punch

7-UP Nigeria Records Losses in Q2 2017

Q2 2017 saw 7-UP Plc grow its revenue by 20% to N32bn, cost of sales spiked by 35% to N27bn resulting in a 25% dip in gross profit to N5bn. Operating expense was up by 26% translating to an operating loss of N670mn. Finance cost spiked by 85% to N1.8bn  leading to a pre and after-tax loss of N2.5bn.

Balance sheet numbers were also unimpressive as total assets slipped by 4% to N84bn, while total liabilities dropped by 1% to N73bn, translating to a 19% drop in net assets to N11bn. Working capital remained negative. See details below.

Income Statement	Q2 2017	Q2 2016	% Change
Revenue (mn)	31,847	26,620	20%
Cost of Sales (mn)	26,674	19,766	35%
Gross Profit (mn)	5,173	6,854	-25%
Operating expense (mn)	5,891	4,673	26%
Operating Profit (mn)	(670)	2,226	-130%
Finance Cost (mn)	1,780	961	85%
PBT (mn)	(2,450)	1,265	-294%
IncomeTax Credit/Expense  (mn)	-	490	-100%
PAT (mn)	(2,450)	776	-416%
Balance Sheet	H1 2017	FY 2016	% Change
Fixed Assets (mn)	39,774	40,340	-1%
Total Assets (mn)	83,692	87,097	-4%
Cash & Bank Balances	6,132	6,010	2.0%
Borrowings (mn)	40,983	43,097	-4.9%
Total Liabilities (mn)	72,917	73,871	-1%
Net Assets (mn)	10,775	13,226	-19%
Working Capital (mn)	(13,626)	(10,436)	31%

Oando Plc Grows Earnings by 130% in H1 2017

Oando Plc in its half year 2017 financials had revenue grow by 130% to N267bn, cost of sales rose by 110% translating to a 565% rise in gross profit to N33bn. Despite a 36% drop in operating expense and a return operating profit, the group recorded a loss before tax of N840mn and a loss after tax of N172mn.

The group's balance sheet show minimal growth in total assets and liabilities translating to a 3% rise in net assets to N199bn. Working capital remained negative. See details below.

Income Statement	H1 2017	H1 2016	% Change
Revenue (mn)	266,978	116,237	130%
Cost of Sales (mn)	233,544	111,208	110%
Gross Profit (mn)	33,434	5,029	565%
Operating expense (mn)	31,506	49,419	-36%
Other Gains & Losses (mn)	12,662	12,635	0%
Operating Profit/Loss (mn)	14,590	(31,755)	-146%
Net Finance Cost (mn)	(16,367)	(35,344)	-54%
LBT (mn)	(840)	(66,836)	-99%
Income Tax/Credit (mn)	668	22,266	-97%
LAT (mn)	(172)	(44,571)	-100%
Balance Sheet	H1 2017	FY 2016	% Change
Fixed Assets (mn)	363,330	362,530	0.22%
Total Assets (mn)	1,029,208	991,545	4%
Financial Liabilities (mn)	333,436	343,586	-3%
Cash & Bank Balances	19,921	10,391	92%
Total Liabilities (mn)	830,452	799,200	4%
Net Assets (mn)	198,756	192,345	3%
Working Capital (mn)	(257,434)	(263,760)	-2%

Nigerian Breweries Releases HI 2017 Financials

In its half year 2017 financials, Nigerian Breweries had revenue grow by 15% to N181bn. Cost of sales rose by 20% to N100bn translating to a 10% rise in gross profit to N81bn. Profit from operations together with lower finance cost resulted to a 33% rise in pre-tax profit to N34bn, while after-tax profit grew by 25% to N24bn.

Balance Sheet numbers showed a 6% rise in total assets to N389bn, while financial liabilities dropped by  15% to N15bn. Total liabilities rose marginally by 0.5% to N211bn leading to a 13% rise in net assets to N178bn. See details below.

Income Statement	H1 2017	H1 2016	% Change
Revenue (mn)	181,010	157,374	15.0%
Cost of Sales (mn)	99,676	83,391	20%
Gross Profit (mn)	81,334	73,983	10%
Operating expense (mn)	43,835	40,326	9%
Operating Profit (mn)	39,317	33,941	16%
Net Finance Cost (mn)	(5,259)	(8,392)	-37%
PBT (mn)	34,059	25,549	33%
Income Tax Credit/Expense  (mn)	10,308	6,482	59%
PAT (mn)	23,751	19,067	25%
Balance Sheet	H1 2017	FY 2016	% Change
Fixed Assets (mn)	186,237	191,182	-3%
Total Assets (mn)	389,208	367,146	6%
Cash & Cash Equivalent (mn)	16,303	12,156	34%
Financial Liabilities (mn)	15,131	17,871	-15%
Total Liabilities (mn)	211,244	210,233	0.5%
Net Assets (mn)	177,964	156,913	13%
Working Capital (mn)	(56,851)	(69,696)	-18%