vanguard markets, july 28, 2014 edition

Looking beyond market size

Vanguard Markets | Monday, July 28 2014 | Issue 003

RESULTS FORECASTING

Fixed Income & Forex

Inside

Different strokes for different stocks

Foreign portfolio managers are dis-criminating against local companies in fa-vour of multinationals in the way they pun-ish and reward argues Jude Fejogwu.

! Page 3

More than guesswork

What do purchasing managers think of the economy? Follow their expectations in the FBN Capital Purchasing Manager Index due out at the beginning of August.

! Page 7

Corporate govern-ance in the DNA

Good governance is good business. If Ni-gerian companies aim to compete globally they must meet strict governance standards writes Soji Apampa

! Page 9

Investors groping in the dark

0B 10.0 10.011/07 14/07 14/0721/07 22/07 22/0724/07 25/07 25/0716/07 17/07 17/07

100B 12.0 15.0

14.075B 11.513.0

50B 11.012.0

25B 10.5 11.0

FGN Bonds & TBills NITTY NIBORFGN BondsTreasury Bills

O/N1M

3M6M

161.514/07 22/07 25/0717/07

162.5

162.3

162.1

161.9

161.7

FX ($/N)

Source: FMDQ

BidAsk

1M2M

3M6M

9M12M

! page 3

the past week, 27 companies an-nounced half year re-

sults. A few like Transnational Corporation of Nigeria have been outstanding, while others such as Unilever have caused dismay among investors. For most others, results have been respectable: neither too hot, nor too cold.

Second quarter results are coming at a time of palpable uncertainty. Investors want to know if vaunted boost in liquidity due to forthcoming elections have started to trickle into corporate coffers.

Analysts, who should be the most informed group, can also have sharp differences in their outlook numbers. Take for ex-ample the forecasts for Guin-ness Nigeria’s 2014 earnings by analysts at 3 different firms.

The variance is even more when forecasts for other com-panies are compared. This of-ten leads to a lot of panic trad-ing in the run-up to the results release week.

Investors want to anchor their projections on authorita-tive statements of business out-look communicated as figures issued by corporate executives. Basically, markets want a meas-ure of predictability around earnings albeit couched with the appropriate caveats.

There are several benefits for companies that make a commitment to giving these forecasts. Fore companies that choose to do so, the forecasts satisfy investment commu-nity demands for information, maintain a channel of com-munication with investors, in-tensify management’s focus on meeting financial targets, mod-

erate the volatility of the share price, build in better clarity into the valuation process, and increase liquidity in its shares.

In its Rule book (2013) the Securities and Exchange’s Rule B(40) requires all publicly quot-ed companies to release their earnings forecast to the public twenty days before the com-mencement of a quarter with a clear statement of the underly-

ing assumptions that form its bases. Importantly, the SEC requires companies to notify it as soon as it is known that the forecast will not be realized. In such cases, the onus is on the company to explain the reason for the non-realization.

The matter here is not about fancy predictions and unwar-ranted optimism as derisorily described by Warren Buffett.

It is about giving investors an inkling of management’s ideas on what the immediate future holds. Forecasts are reputa-tional savings booklets for ex-ecutives to build credibility with the investment community.

Neither is it about ingenious earnings management that can corrode executive ethics through accounting acrobatics. Investors simply want to get a tangible sense of the business outlook in the near-term.

A good clutch of companies on the NSE used to give fore-casts until recently. This no longer seems to be the case. Could it be that companies are reluctant to release guidance in

a strained economic situation? This could well be.

The NSE and SEC should as a matter of importance insist that companies give the mar-kets sufficient notice on the date and time when they will publish their results. This helps inves-tors to plan around the news. It would also enable companies to decide if they want to crowd in or out when others are releasing their results. An orderly report-ing calendar is a sine qua non for the NSE.

Altogether, regulators and companies need to do more to iron out the uncertainties around the release of company results. ;

EARNINGS RELEASE DATES IN PAST WEEK

Company Results Release DateHoneywell Flour July 25

Champion Breweries July 25

UBA PLC July 25

Union Bank Nigeria July 25

DN Meyer July 25

Cadbury Nigeria July 25

Aluminium Extrusion July 25

Chellarams July 25

Sterling Bank July 25

Abbey Building July 25

CCNN July 25

FCMB July 25

Stanbic IBTC July 25

Portland Paints July 25

Seplat July 24

First Aluminium July 23

Tripple Gee July 23

Trans Nationwide Express July 23

Zenith Bank July 23

SCOA Nigeria July 23

CAP July 22

Linkage Assurance July 22

McNichols July 22

International Breweries July 21

Oasis Insurance July 21

Sovereign Trust Insurance July 21

Transcorp July 21

GUINNESS NIGERIA FY 2014 ANALYST FORECASTS

CSP DLM CHPIncome Statement

(N’Mn) 2013 2014E 2014E 2014E

Revenue 131,414 106,429 104,800 114,199

Cost of Sales -70,861 -54,279 56,592 51,155

Gross Profit 60,554 52,150 48,208 63,044

Distri. And Admin Expenses

-36,280 -28,417 30,916 -34,831

EBIT/Operating profit

20,614 15,394 18,074 20,315

Interest Expense/Income

-3,605 -3,211 -3,997 -5,535

Pre-tax earnings 17,009 12,182 14,467 14,941

Taxation -5,145 -2,436 -4,373 -4,082

Profit after tax 11,864 9,746 10,094 10,859EPS 6.47 6.7 7.21

In

Source: CardinalStone Partners, Dunn Loren Merrifield, and Chapel Hill Partners

Source: Nigerian Stock Exchange

Investors want to anchor their projections on authoritative statements of business outlook communicated as figures issued by corporate executives

strategy sessions and management meetings, the world’s

biggest companies are ponder-ing a Nigeria strategy. Those that do have one are busy fine-tuning theirs. Those that do not, are leaving no stone unturned in a frantic search for one. In fact, there is a bud-ding consultancy market has appeared to proffer advice on the best ways to penetrate and

conquer the wallets of Nige-rians. It has become a case of no company left behind. The painful truth is that some com-panies will be left behind.

The spotlight on Nigerian consumers marks a tectonic shift in the traditional focus of foreign investment inter-est in the country. In the past, most of the attention was from energy companies jostling for its energy assets. The focus is no longer on the marshlands of the oil-rich Niger Delta re-gion. It now looks hungrily on the country’s emergent middle class.

Purveyors of packaged con-sumer goods, white goods, cars, electronics, mobile phones, alcoholic drinks, and a bevy of other products are cracking their heads to find the secret formula. When they do they guard it jealously. Copy-cats are always lurking in the corner. In this part of the world there is no rest for the success-ful.

The reality is that the size of the Nigerian market is a different matter from the size of incomes that Nigerian con-sumers have to spend. Seni Adetu, chief executive officer of Guinness Nigeria noted during a recent interview that ‘there could be difference be-tween what the macro econ-omy says and what actually happens to the consumer from a spending stand point. What we do know is that private con-sumption declined last year versus the year before.’ There is also the issue around which

strategies will work and which companies can execute best.

This is a lesson that many companies will have to learn the hard way. Those few that can navigate what one execu-tive at a multinational com-pany has described as ‘the treacherous waters of com-merce in Nigeria’ stand to reap big rewards.

In its June report, man-agers for Arisaig’s Africa Consumer Fund wrote that for consumer-focused multi-nationals in its portfolio the long-term story for Nigeria is as compelling as ever. This is

INSIGHT2

JAYWALKER

VM | Monday, July 28, 2014 | Issue 003

Stacking crates of Hero beer at SABMiller depot, Onitsha, Anambra State

The spotlight on Nigerian consumers marks a tectonic shift in the traditional focus of foreign investment interest in the country

For all the challenges of the Nigerian market, if companies do not have a Nigeria strategy, they do not really have an Africa strategy - Mark Bowman, SABMiller CEO (2009)

There could be difference between what the macro economy says and what actually happens to the consumer from a spending stand point - Seni Adetu, managing director, Guinness Nigeria

Obiora [email protected]

Strategy, not size, mattersmainly because of their view that current consumption in their categories is a tiny frac-tion of developed market lev-els. The Singapore-based fund, which has significant holdings of Guinness Nigeria and Uni-lever Nigeria shares, calcu-lates that in the ‘Eat, Drink, Wash’ category this ratio of

frontier to advanced markets ratio is about 1:7. Therefore, it concludes that the surface has barely been scratched.

For all this insight it is not a given that the brands of these multinationals will emerge tops in the competition. In strait-ened times, consumers want value, governments demand lo-cal production, and sharehold-ers demand higher profits.

One company is excelling at the game of balancing these competing demands.

The Patient Brewer, and the Fattest Beer: SABMiller’s Experience

During a SA-Nigeria Cham-ber of Commerce event in 2009, Mark Bowman, chief executive of SABMiller Af-rica told his audience that its two main competitors in Nige-

ria, Guinness and Heineken, make nearly as much in Nige-ria as it was making in 24 other African countries, excluding SA. He went on to state that for all the challenges of the Nigerian market, if companies do not have a Nigeria strategy, they do not really have an Af-rica strategy.

All that has changed. The company, which operates in 15 African countries with partner-ships in 21 more, made its entry into Nigeria in the same year with the purchase of a majority stake in Pabod Breweries, Riv-ers State. It wasted little time in adding International Brew-eries Plc, Ilesha to its portfo-lio. In a deft move, SABMiller has positioned Hero, one of its brands as a value beer, selling it by as much as 40 per cent cheaper than its competitors.

The company took on giants when entering Nigeria, which accounted for 15 per cent of the

continent’s beer consumption, but has a capita consumption of only a sixth of South Africa’s. At the time it took a foothold Nigerian Breweries and Guin-ness Nigeria had 69 per cent and 28 per cent market shares respectively.

The company has followed a smart strategy and executed

well on it. It aims to reduce the price of beer for lower-income consumers, while at the same time attracting more drinkers to its premium green bottle brands. Bowman has publicly stated that his goal is to bring the price down to less than two hours of work for the average lower-income worker.

This is not to say that SAB-Miller is ignoring the premium sector. It keeps a keen eye trained on that too, ready to capitalize on new opportuni-ties thrown up by rises in dis-posable income.

Elsewhere, SABMiller does not hide the fact that it actively engages with governments to of-fer cheaper beer. By negotiating lower tax rates the company can sell cheaper beer to more cus-tomers. In the process, it earns more money and can pays high-er taxes on these volumes.

Bowman explained that ‘we negotiate with governments to try and persuade them to drop the excise regime for a product that’s made with local grains, which most governments are quite supportive of. The idea here then is to try and create a win-win proposition, where we have a strong group of farmers contracted to producing grains for us of whatever form. The government gets a new source of revenue … And of course we win in that. We’re able to open up this category and poten-tially bring consumers in ear-lier into the beer category than they otherwise would.’

In January, the company an-nounced that it plans to invest up to $110 million to triple ca-pacity to 2.1 million hectolitres per annum.

For SABMiller, life is good.That is, until the next com-

pany comes to steal your lunch. Or shall we say drink? ;

In

Hours worked to buy a 500ml beer

Disposable Income per Nigerian Household since 1995

Source: SABMiller

Source: AT Kearney

Source: Stanbic IBTC

CommentDespite having the lowest income among its BRIC and MINT peers (Brazil, Russia, India, China, Mexico, Indonesia, and Turkey) in the 20-year period since 1995, the country’s disposable income growth rate has topped theirs.

TanzaniaMozambiqueUgandaKenyaEthiopiaZambiaGhanaNigeriaBotswanaSouth AfricaUnited States

0 1 2 3 4 5 6 7

AVERAGE ANNUAL GROWTH RATES (%)

Analysis GDP Private Consumption

2010-2015 6.1 5.9

2016-2020 1.8 3.7

2012-2025 1.7 5.6

2026-2030 4.3 7.5

2010-2030 3.3 5.7

POPULATION IN THE 15-39 AGE GROUP

Analysis Million % of Total Population

2010 63.3 40.0

2020 80.5 41.6

2030 98.6 43.5

2040 112.3 43.3

0‘90 ‘95 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘12

1000

2000

3000

4000

5000

6000

ude Fejogwu, principal analyst at Thaddeus Af-

rica Research, an equity research and investment ad-visory firm, has criticised the excessive weighting of mul-tinational companies in the stock portfolios of frontier markets-focused funds. In an email sent out last week, he gave evidence to support his claims that excluding the banking sector, these fund managers demonstrate a clear bias for multinational companies in their equities selection on the Nigerian Stock Exchange.

The discriminatory prac-tice does not end there. The analyst showed that mul-tinational stock prices are not penalized at all or only penalized in little quanta for earnings disappointments and strategic missteps. In contrast, local companies in comparable situations are punished when their earnings fall short. These practices have adverse selection impli-cations. Due to massive posi-tions of the foreign portfolio managers in the MNC stocks they have ‘driven up the pric-es of these stocks to expensive levels.’ When presented the data, these managers defend themselves with the claim that MNC stocks, being tried, tested, and true (interpreta-tion: familiar) offer a better guarantee of capital apprecia-tion.

The fallacy of this circular argument is what Thaddeus takes an issue with. In his missive, Fejogwu dismisses the self-fulfilling prophesy inherent in the foreign fund managers’ excuses. According to him, ‘their repetitive and persistent actions over time have led to overly generous

and sincerely undeserving stock price increases in these multinational stocks across African stock markets; this further strengthens their de-sire to continue investing in more multinational compa-nies.’

The push up in the prices of

these MNC stocks have taken a life of their own, unfet-tered from the reality of their quarterly and annual perfor-mances. ‘Despite these price surges that rarely reverse at a pace anywhere close to how they rose and disappointing results in recent years, the

stocks are continually in high demand by portfolio manag-ers,’ he observed.

This has perverse impli-cations on local companies listed on the bourse. When compared with their MNC peers, they are not adequately rewarded when they perform well. Worse, they are over-penalized when they falter. There is no reason why ‘the local stocks get punished more when they disappoint and get rewarded miserly or not at all when they perform creditably.’

He provides facts to back his position.

The lacklustre perfor-mance of Unilever Nigeria is a case in point. In spite of this, their stock price perfor-mance does not reflect the reality of submerged net in-come performance. Its share price has declined only 7 per cent, although its net income dropped sharply by 47 per cent. Thaddeus’ valuation estimated that the compa-ny’s shares should be trad-ing below N33.22. Instead,

the stock’s 52-week low is N43.32. This is a 30 per cent premium over what it should fairly be worth. This is all because of its pedigree as a multinational. If life is unfair, should markets be too?

Fejogwu blames the MNC-hugging of most foreign fund managers of sloth. If it is not broke, why fix it? If an invest-ment pattern has consistently made money in the past, why change it now? He mentions the case of Coronation Funds, the Cape Town based manager that has $40 billion in assets under management. It has $200 million invested in Nigeria alone, Peter Leger, the manager of its Africa Frontiers Portfolio has deliv-ered benchmark thumping returns.

Coronation may also be the closest that the NSE has to a major activist investor. It stood up to GSK Consumer (2,617,002 units held, 0.27% stake, $7 million estimated value) last year when the company tried to railroad investors to approve a $98

million (321 million shares) increase in the parent com-pany’s stake. In the aftermath of the announcement by La-farge, the cement company, that it planned to merge its Nigerian and South Afri-can businesses, Coronation, which claims to have $10 mil-lion invested across its Africa funds in the company, went public with its disapproval. It questioned why Lafarge would value the ‘slow grow-ing’ South African business at a price earnings multiple of 20.9, while the faster growing Nigerian business was valued at 12.5 times earnings.

Looked at from this an-gle, foreign fund managers may be seen as vice squads that follow MNCs to frontier markets like Nigeria’s to en-sure that they comply with the same high standards that their parent companies meet in advanced markets. Their insistence on sound corporate governance in MNC’s frontier market subsidiaries, and the ability to bring pressure to bear on parent companies, whose shares other funds under their firms may also hold, should not be dismissed lightly.

Be that as it may, Fe-jogwu’s findings revert to a long-standing debate on the role of these fund manag-ers. Are they paid to take risk and generate alpha or simply coast their benchmarks and preserve capital? If the for-mer, then there is no reason why they should show a bias against local Nigerian cham-pions. If the latter, then regu-lators like the Nigerian Stock Exchange must have a rethink about the beneficial effect of prioritising foreign investors over local ones. ;

INVESTMENT 3

PERFORMANCE

SPOTLIGHT


Source: Thaddeus Investment Advisors & Research

Source: Nigerian Stock Exchange

Thaddeus Research queries MNC-bias among foreign portfolio managers on NSE

a piece he penned in April for the In-ternational Busi-ness Times, Danladi

Verheijen betrayed his en-thusiasm for the economy’s outlook. Nigeria’s future con-tinues to be bright for Nigeri-ans as the creation of wealth escalates to new heights, and the local economy continues to prosper as foreign invest-ment in the country grows. He threw an open invitation to investors to jump in right away because ‘this is just the beginning of one of the most exciting growth stories in the world today.’

The former Citibank vice-

president, who holds an engineering degree from Stanford University and an MBA from Harvard, has been quietly building one

of Nigeria’s most success-ful private equity firms. He co-founded the firm with a friend, Eric Idiahi, in 2008. Some of its past investments include HFP Engineer-ing, a real estate develop-ment, construction and civil engineering company, GZI Industries, an aluminium beverage can maker, and Ro-toptrint, a maker of flexible plastic packaging for the fast moving consumer goods sec-tor. The firm’s investments across 9 companies in its portfolio have returned six times their original financial commitment.

In January 2013, Verod

exited its investment in GZI Industries through a sale to Standard Chartered and Ash-more, a specialist emerging markets investment man-ager. Peter Baird, head of PE at Standard Chartered gave a ringing endorsement. ‘Verod did an amazing job at developing GZI into a world-class business by the time we entered. I would probably invest in any Standard Char-tered client that Verheijen works with.’

More recently, in May, the company announced that it is constructing what will be the largest fish farm in Africa in Epe, Lagos. When complet-

ed, it will have 10,000-tonne per annum or 30 tonnes per day capacity.

He is both modest and proud about the work he is doing. ‘Some of the work that I do would be no big deal in the United States but in Nigeria, these projects are transformative. In the States, people do what I do to in-crease the profit for a com-pany by a half of a percent, that’s the goal. My goal is to change lives.’

Quite unusual for a PE firm, Verod does not raise funds. Instead, it raises money on a deal-by-deal ba-sis. This is counter-intuitive

considering that PE firms around the world have been advocating for long-term capital, and complaining about the stresses of con-stantly raising money anew for each opportunity.

The Verod co-founder who cites his mother, the first fe-male professor of Physics in Africa, as his inspiration at-tended Hillcrest School, a private Christian high school in Jos. He says that he re-tains the ethics of his reli-gious faith in business.. The financier was named a Young Global Leader by the World Economic Forum in March 2014. ;

Danladi Verheijen, Co-Founder, Verod Capital Management

In

Danladi Verheijen, managing director,

Verod Capital Management

MNCS VERSUS LOCALS COMPS

Multinational P/E YTDYear-on-Year

Change in Net Income

IBL (SABMiller) 46.1 2.79% -9.50%

Nestlé Foods 33.4 -6.25% 0.10%

NB (Heineken) 31.1 5.47% 16%

Guinness 24.9 -16.31% -22%

Unilever Nigeria 39.5 -6.80% -47%

Cadbury 38.7 -18.21% -29%

Lafarge Cement WAPCO 12.6 3.48% 34%

Local Company

Cement Co Northern Nigeria

10.7 2.47% 87%

Dangote Sugar 10.3 -20.94% 7%

Vitafoam 8.7 -11.22% -4%

CORONATION AFRICAN FRONTIER FUND PERFORMANCE (GROSS OF FEES)

FundFTSE/JSE

Africa Top30*

Outperform

Since Launch (cumulative)

162.35% 35.93% 126.42%

Since Launch (p.a.) 18.26% 5.48% 12.78%

Latest 5 years (p.a.) 17.68% 5.33% 12.35%

Latest 3 years (p.a.) 17.19% 5.34% 11.85%

Latest 1 year (p.a.) 31.01% 5.24% 25.77%

Year to date 10.69% 2.62% 8.08%

2013 27.37% 5.27% 22.10%

2012 31.30% 5.42% 25.88%

2011 -14.63% 5.34% -19.98%

*excl. South Africa Source: Coronation African Frontiers Portfolio

J

Historical Trading Split between Foreign and Domestic Investors on the NSE

0

1000

2007 2008 2009 2010 2011 2012 2013

2000

3000

4000Foreign Investor (N’ Billion)Domestic Investor (N’ Billion)

MARKET DATA4

MARKET SNAPSHOT

3-MONTH PRICE TREND OF BELLWETHER STOCKS

LEGEND

ACCESS 9.7211.147.22

1YtD 0.121.25%

1.2915.30%

-0.08-0.82%3M 1W

PE 6.190.08

May June July21/07

M T W T F

25/07

ASHAKACEM 30.2334.1713.87

1YtD 8.3538.16%

13.7383.21%

-2.79-8.45%3M 1W

PE 37.842.79

May June July21/07

M T W T F

25/07

CADBURY 70.54110.0067.80

1YtD -26.64-27.42%

-5.46-7.18%

-1.47-2.04%3M 1W

PE 47.291.47

May June July21/07

M T W T F

25/07

CAP 40.0051.6635.96

1YtD -7.98-16.63%

-1.98-4.72%

0.481.21%3M 1W

PE 24.490.48

May June July21/07

M T W T F

25/07

CCNN 14.1714.178.00

1YtD 2.1818.18%

5.3260.11%

2.3519.88%3M 1W

PE 12.652.35

May June July21/07

M T W T F

25/07

CONOIL 58.9079.8025.92

1YtD -2.42-3.95%

12.1525.99%

-3.42-5.49%3M 1W

PE 18.683.42

May June July21/07

M T W T F

25/07

FBNH 15.2217.4911.50

1YtD -1.08-6.63%

2.0315.39%

-0.68-4.28%3M 1W

PE 7.050.68

May June July21/07

M T W T F

25/07

GLAXOSMITH 65.7174.9758.50

1YtD -4.29-6.13%

-4.29-6.13%

-0.40-0.61%3M 1W

PE 23.010.40

May June July21/07

M T W T F

25/07

JBERGER 64.0176.4559.18

1YtD 0.941.49%

2.874.70%

1.322.11%3M 1W

PE 9.351.32

May June July21/07

M T W T F

25/07

NB 178.00189.00140.00

1YtD 12.997.87%

29.6019.95%

2.391.36%3M 1W

PE 33.992.39

May June July21/07

M T W T F

25/07

PZ 37.6045.9830.08

1YtD 0.601.63%

0.802.17%

-2.20-5.53%3M 1W

PE 29.102.20

May June July21/07

M T W T F

25/07

UBA 7.909.606.65

1YtD -1.25-13.66%

1.0014.49%

-0.16-1.99%3M 1W

PE 4.650.16

May June July21/07

M T W T F

25/07

CONTINSURE 1.131.330.93

1YtD -0.07-5.83%

0.1414.14%

-0.02-1.74%3M 1W

PE 7.060.02

May June July21/07

M T W T F

25/07

FCMB 4.204.903.01

1YtD 0.369.38%

0.6518.31%

-0.06-1.41%3M 1W

PE 4.78-0.06

May June July21/07

M T W T F

25/07

GUARANTY 31.0031.8022.67

1YtD 3.2511.71%

3.7013.55%

1.053.51%3M 1W

PE 9.491.05

May June July21/07

M T W T F

25/07

MANSARD 2.552.731.95

1YtD 0.052.00%

0.166.69%

-0.13-4.85%3M 1W

PE 16.680.13

May June July21/07

M T W T F

25/07

NESTLE 1105.001250.01916.00

1YtD -77.00-6.51%

23.912.21%

-19.30-1.72%3M 1W

PE 38.8619.30

May June July21/07

M T W T F

25/07

TOTAL 176.45195.50146.26

1YtD 3.151.82%

13.458.25%

-10.94-5.84%3M 1W

PE 13.6710.94

May June July21/07

M T W T F

25/07

UNILEVER 47.6365.0042.50

1YtD -5.37-10.13%

-0.42-0.87%

-5.14-9.74%3M 1W

PE 35.765.14

May June July21/07

M T W T F

25/07

DANGCEM 231.99250.02185.00

1YtD 15.837.32%

4.161.83%

-8.06-3.36%3M 1W

PE 19.678.06

May June July21/07

M T W T F

25/07

FIDELITYBK 1.983.081.85

1YtD -0.72-26.67%

0.031.54%

0.042.06%3M 1W

PE 2.910.04

May June July21/07

M T W T F

25/07

GUINNESS 197.15266.70162.00

1YtD -38.86-16.47%

7.153.76%

-0.90-0.45%3M 1W

PE 25.020.90

May June July21/07

M T W T F

25/07

MOBIL 161.41178.84102.00

1YtD 45.4139.15%

36.4129.13%

-0.81-0.50%3M 1W

PE 15.460.81

May June July21/07

M T W T F

25/07

OANDO 25.4736.899.32

1YtD -1.26-4.71%

9.4959.39%

0.481.92%3M 1W

PE 22.850.48

May June July21/07

M T W T F

25/07

UACN 62.0067.8542.58

1YtD 6.0110.73%

15.8834.43%

-0.06-0.10%3M 1W

PE 29.130.06

May June July21/07

M T W T F

25/07

WAPCO 118.90136.7387.50

1YtD 3.903.39%

6.756.02%

-0.11-0.09%3M 1W

PE 14.680.11

May June July21/07

M T W T F

25/07

DIAMONDBNK 6.708.205.86

1YtD -0.80-10.67%

0.569.12%

0.406.35%3M 1W

PE 4.050.40

May June July21/07

M T W T F

25/07

FLOURMILL 74.0092.0063.91

1YtD -16.00-17.78%

6.189.11%

-1.30-1.73%3M 1W

PE 21.891.30

May June July21/07

M T W T F

25/07

HONYFLOUR 4.264.502.56

1YtD 0.4110.65%

0.266.50%

-0.04-0.93%3M 1W

PE 12.500.04

May June July21/07

M T W T F

25/07

MRS 58.9070.0032.53

1YtD 7.1813.88%

9.7619.86%

2.554.53%3M 1W

PE 59.612.55

May June July21/07

M T W T F

25/07

OKOMUOIL 33.0648.0532.15

1YtD -11.77-26.25%

-2.94-8.17%

-0.02-0.06%3M 1W

PE 14.410.02

May June July21/07

M T W T F

25/07

UAC-PROP 17.6021.3111.95

1YtD 2.2214.46%

-2.27-11.43%

0.120.69%3M 1W

PE 7.940.12

May June July21/07

M T W T F

25/07

ZENITHBANK 25.2327.4019.23

1YtD 0.230.92%

2.9012.99%

0.010.04%3M 1W

PE 7.290.01

May June July21/07

M T W T F

25/07

TICKER 25.2327.4019.23

1YtD 0.230.92%

2.9012.99%

0.010.04%3M 1W

PE 7.290.01

May June July21/07

M T W T F

25/07

ETI 16.9018.5212.40

1YtD 0.513.11%

3.3024.26%

0.020.12%3M 1W

PE 4.610.02

May June July21/07

M T W T F

25/07

FO 216.00259.9435.00

1YtD 123.13132.58%

74.4552.60%

-21.90-9.21%3M 1W

PE 46.6321.90

May June July21/07

M T W T F

25/07

INTBREW 26.6531.5017.98

1YtD -1.67-5.90%

0.652.50%

-2.33-8.04%3M 1W

PE 44.512.33

May June July21/07

M T W T F

25/07

NASCON 10.5915.1010.15

1YtD -4.26-28.69%

-0.73-6.45%

-0.13-1.21%3M 1W

PE 10.090.13

May June July21/07

M T W T F

25/07

PRESCO 38.0149.0032.00

1YtD -0.99-2.54%

-4.99-11.60%

0.010.03%3M 1W

PE 4.540.01

May June July21/07

M T W T F

25/07

3 4 5

9

13

10 11

12

6

8

14

7

21

1. 52-week low price2. Year low price3. Current price4. Year high price5. 52-week high price6. Current price7. 5-day price change8. PE ratio9. 1-year price change10. 3-months price change11. 1-week price change12. Daily price movement over 3 months.13. 30-day moving average14. Daily price movement over last week


MARKET SNAPSHOT

MARKET DATA 5

# TICKER WTD YTD

1 DANGCEM -3.36 7.32

2 NB 1.36 7.87

3 GUARANTY 3.51 11.71

4 NESTLE -1.72 -6.51

5 ZENITHBANK 0.04 0.92

6 FBNH -4.28 -6.63

7 WAPCO -0.09 3.39

8 GUINNESS -0.45 -16.47

9 STANBIC 6.56 30.21

10 ETI 0.12 3.11

11 UBA -1.99 -13.66

12 FO -9.21 132.58

13 OANDO 1.92 -4.71

14 ACCESS -0.82 1.25

15 TRANSCORP -7.08 26.96

16 UNILEVER -9.74 -10.13

17 FLOURMILL -1.73 -17.78

18 UBN -0.96 -3.75

19 PZ -5.53 1.63

20 CADBURY -2.04 -27.42

21 UACN -0.10 10.73

22 DANGSUGAR 0.00 -18.58

23 DIAMONDBNK 6.35 -10.67

24 INTBREW -8.04 -5.90

25 JBERGER 2.11 1.49

26 FCMB -1.41 9.38

27 ASHAKACEM -8.45 38.16

28 7UP 0.45 47.70

29 GLAXOSMITH -0.61 -6.13

30 TOTAL -5.84 1.82

31 MOBIL -0.50 39.15

32 FIDELITYBK 2.06 -26.67

33 STERLNBANK -4.64 -9.60

34 SKYEBANK -5.88 -29.05

35 CONOIL -5.49 -3.95

36 PRESCO 0.03 -2.54

37 OKOMUOIL -0.06 -26.25

38 CAP 1.21 -16.63

39 NEIMETH 2.54 10.00

40 MAYBAKER -2.86 -33.33

WEEK-TO-DATE RETURN-15% -10%

-40%

-20%

-30%

-10%

0%

+10%

+20%

+30%

+40%

+50%

+60%

+70%

+80%

+100%

+90%

+120%

+130%

+140%

+110%

+150%

-5% 0% +10%+5%

YEA

R-TO

-DAT

E RE

TURN

LAGGING

SLIPPING LEADING

IMPROVING

1 23

45

6

7

8

9

10

11

12

13

14

15

16

17

1819

20

21

22

2324

25

26

27

28

29

30

31

32

33

34

35 36

37

38

39

40

The relative size of each individual stock’s bubble chart is determined by its market capitalization. For indices, the relative size of each bubble chart is the total value of the capitalization modified values of each constituent stock.Pink bubbles represent individual stocks, and grey bubbles represent indexes.

TRADING BREAKDOWN BY SECTOR

Sector %

Financial Services 56 \ 73

Conglomerates 17 \ 8

Oil & Gas 8 \ 8

Others 19 \ 11

21/07 25/0723/0612.5

12.6

12.7

12.8

12.9

2910

2915

2920

2925

2930

FGN Bond Index

Market Value YTD Return


INDEX PERFORMANCE

Index Week Opening

Week Close Change WtD MtD QtD YtD

1 All Shares Index 42,784.30 42,285.82 -606 -1.41 -0.46 -0.46 2.31

2 NSE 30 Index 1,944.33 1,933.21 -15.53 -0.8 0.07 0.07 1.37

3 NSE Banking Index 436.56 441.72 3.01 0.69 2.04 2.04 -1.37

4 NSE Insurance Index 148.35 148.73 -1.68 -1.12 1.29 1.29 -2.71

5 NSE Consumer Goods Index 1,060.41 1,054.31 -5.47 -0.52 -0.37 -0.37 -4.18

6 NSE Oil/Gas Index 470.24 453.72 -15.37 -3.28 -3.1 -3.1 33.49

7 NSE Lotus Islamic Index 2,848.70 2,813.19 -40.19 -1.41 -2.14 -2.14 -1.74

8 NSE Industrial Index 2,770.47 2,714.02 -53.09 -1.92 1.77 1.77 6.57

MARKET SNAPSHOT

Date Deals Turnover Volume Turnover Value Traded Stocks Advanced

StocksDeclined Stocks

Unchanged Stocks

All Shares Index Value

1 21.07.2014 5,862 535,076,684 4,374,954,616.87 113 \ 125 22 \ 27 39 \ 29 52 \ 69 42,930.60

2 22.07.2014 6,323 430,136,315 4,019,168,972.53 113 \ 114 25 \ 33 30 \ 27 58 \ 54 42,971.56

3 23.07.2014 4,766 273,484,128 3,076,614,373.12 112 \ 120 29 \ 22 36 \ 26 47 \ 72 43,030.27

4 24.07.2014 187 2,607,903 13,731,313.39 51 \ 114 5 \ 27 1 \ 25 45 \ 62 42,918.52

5 25.07.2014 7,048 536,869,982 26,618,591,033.33 116 \ 117 23 \ 34 40 \ 21 53 \ 62 42,891.82

The \ arrow signifies week-on-week change in value. This week’s value is shown on the left of the \ sign, and last week’s value on the right.

GLOBAL INTEREST RATES & INFLATION TARGETSCentral Bank Rate Last Date

Change%

Change Inflation

TargetChina 6.00% 05.07.2012 -0.31 4.00%Japan 0-0.10% 05.10.2010 -0.20 2.00%

UK 0.50% 05.03.2009 -0.50 2.00%USA 0-0.25% 16.12.2008 -0.75 2.00%

Eurozone 0.15% 05.06.2014 -0.10 <2.00%Brazil 11.00% 02.04.201 +0.25 4.5% +/-2.0%Canada 1.00% 20.07.2010 +0.25 2.0% +/-1.0%Egypt 8.25% 05.12.2013 -0.50

India 8.00% 28.01.2014 +0.25Indonesia 7.50% 12.11.2013 +0.25 4.5% +/-1.0%Malaysia 3.25% 10.06.2014 +0.25Mexico 3.00% 06.06.2014 -0.50 3.00% +/-1.0%Morocco 3.00% 28.03.2012 -0.25Nigeria 12.00% 10.10.2011 +2.75 6.00% - 9.00%Qatar 4.50% 10.08.2011 -0.50Russia 7.50% 25.04.2014 +0.50 5%*

Thailand 2.00% 12.03.2014 -0.25 0.5% - 3.0%Turkey 8.75% 24.06.2014 -0.75 5.00%

* +/- 1.5 pct point uncertainty band

Indices

ASI

NSE30

NSEBNK

NSEINS

NSECNSMRGDS

NSEOILGAS

NSELOTUSISLM

NSEINDUSTR

-1.41%-0.57%

-0.80%-0.16%

0.69%0.90%

-1.12%-1.02%

-0.52%-0.40%

-3.28%-3.01%

-1.41%-0.42%

-1.92%-0.40%

2.31%

YtD, % WtD, % DtD, %

1.37%

-1.37%

-2.71%

-4.18%

33.49%

-1.74%

6.57%

-5% -3% 0% 7%5%3%

MoFr1,970

1,975

1,985

1,980

1,9901,978.34

Tu We Th Fr

S&P 500

MoFr6,725

6,750

6,800

6,775

6,8256,791.55

Tu We Th Fr

FTSE 100

MoFr42.20

42.40

43.80

42.60

43.0042,285.82

Tu We Th Fr

NSEASI

MARKET SNAPSHOT

MARKETS DATA6 VM | Monday, July 28, 2014 | Issue 003

INTERNATIONAL STOCK INDICES

Region/ Country Index

LAST CHANGE PERFOR-MANCE (%)

Close Net Change

% change YtD 52-

wk

EUROPE Stoxx Europe 600 344.33 1.47 0.43 4.90 0.14

Stoxx Europe 50 3050.27 12.48 0.41 4.5 12.20

Euro Zone Euro Stoxx 325.08 2.91 0.9 3.4 16.70

Euro Euro Stoxx 50 3220.07 26.94 0.84 3.6 17.00

Austria ATX 2372.87 -3.73 0.16 -6.8 1.90

Belgium Bel-20 3195.53 18.53 0.58 9.3 19.90

Czech Republic PX 952.73 1.45 0.15 -3.7 5.30

Denmark OMX Copenhagen 671.65 -1.26 -0.19 18.7 34.80

Finland OMX Helsinki 7757.39 59.04 0.77 5.7 25.10

France CAC-40 4410.65 34.33 0.78 2.7 11.30

Germany DAX 9794.06 40.5 0.42 2.5 16.90

Hungary BUX 17952.63 -51.88 -0.29 -3.3 -3.10

Ireland ISEQ 4740.77 -1.72 -0.04 4.4 15.20

Italy FTSE MIB 21255.6 424.34 2.04 12.1 29.30

Netherlands AEX 409.98 1.45 0.35 2 10.20

Norway All-Shares 699.29 -0.56 -0.08 16 28.80

Poland WIG 51613.47 72.66 0.14 0.6 10.20

Portugal PSI 20 6467.83 90.4 1.42 -1.4 12.70

Russia RTSI 1266.72 -5.3 0.42 -12.2 -6.40

Spain IBEX 35 10860.7 201.6 1.89 9.5 32.6

Sweden OMX Stockholm 454.54 2.11 0.47 7.3 17.6

Switzerland SMI 8637.01 31.91 0.37 5.3 9.8

Turkey BIST 100 83824.65 970 1.17 23.6 13.3

U.K. FTSE 100 6821.46 23.31 0.34 1.1 3

ASIA-PACIFIC DJ Asia-Pacific TSM

1532.23 -1.59 -0.1 5.8 10.1

Australia SPX/ASX 200 5587.8 11.1 0.2 4.4 11

ChinaShanghai Composite

2105.06 26.57 1.28 -0.5 4.2

Hong Kong Hang Seng 24141.5 169.63 0.71 3.6 10.2

India S&P BSE Sensex 26271.85 124.52 0.48 24.1 32.7

JapanNikkei Stock

Average15284.42 -44.14 -0.29 -6.2 5

Singapore Straits Times 3353.89 13.19 0.39 5.9 3.7

South Korea Kospi 2026.62 -1.7 -0.08 0.8 6.1

AMERICAS DJ Americas 501.88 0.75 0.15 7.8 17.5

Brazil Bovespa 57895.64 475.68 0.83 12.4 19.7

Mexico IPC 44405.21 206.2 0.47 3.9 8.7

COMMODITIES

Commodity Exchange 1-DAY CHANGE

Year High Year LowLast price Net Change % change

Corn (cents/bu.) CBOT 369.25 -1.5 -0.40% 517 364.25

Soybeans (cents/bu.) CBOT 1085.75 9.25 0.86% 1,279.25 1,055.00

Wheat (cents/bu.) CBOT 529 -1.75 -0.33 751.5 520.25

Live cattle (cents/lb.) CME 158.15 0.15 0.09 159.85 130.9

Cocoa ($/ton) ICE-US 3,202 17 0.53 3,234 2,650

Coffee (cents/lb.) ICE-US 178.35 1.75 0.99 220.6 116.7

Sugar (cents/lb.) ICE-US 17.06 0.1 0.59 18.91 15.72

Cotton (cents/lb.) ICE-US 66.23 -1.85 -2.72 84.74 65.66

Rapeseed (euro/ton) LIFFE 327.75 -1.5 -0.46 386 301

Cocoa (pounds/ton) LIFFE 1,944 6 0.31 1,952 1,651

Robusta coffee ($/ton) LIFFE 2,034 41 2.06 2,216 1,568

Copper ($/lb.) COMEX 3.263 0.056 1.75 3.3855 2.878

Gold ($/troy oz.) COMEX 1294 -12.5 -0.96 1,390.80 1,207.00

Silver ($/troy oz.) COMEX 20.41 -0.585 -2.79 22.16 18.65

Aluminum ($/ton)* LME 2,030.50 -8.5 -0.42 2,039.00 1,686.50

Tin ($/ton)* LME 22,200.00 40 0.18 23,770.00 21,410.00

Copper ($/ton)* LME 7,070.50 5.5 0.08 7,422.00 6,430.00

Lead ($/ton)* LME 2,210.50 -15.5 -0.7 2,242.00 2,033.00

Zinc ($/ton)* LME 2,366.00 -4 -0.17 2,370.00 1,948.00

Nickel ($/ton)* LME 19,065 65 0.34 21,100 13,425

Crude oil ($/bbl.) NYMEX 101.94 -1.18 -1.14 106.64 88.93

Heating oil ($/gal.) NYMEX 2.8798 -0.0059 -0.2 3.0848 2.8405

RBOB gasoline ($/gal.) NYMEX 2.8199 -0.0189 -0.67 3.0732 2.6607

Natural gas ($/mmBtu) NYMEX 3.843 0.067 1.77 4.885 3.759

Brent crude ($/bbl.) ICE-EU 107.12 -0.91 -0.84 115.09 102.75

Gas oil ($/ton) ICE-EU 888.5 -2 -0.22 949.25 874

Exchange Legend: CBOT: Chicago Board of Trade; CME: Chicago Mercantile Exchange; ICE-US: ICE Futures, U.S.MDEX: Bursa Malaysia, Derivatives Berhad; LIFFE: London International Financial Futures Exchange; COMEX: Commodity Exchange; LME: London Metals Exchange; NYMEX: New York Mercantile Exchange; ICE-EU: ICE Futures Europe *Data as of July 23, 2014

CURRENCY CROSS RATES

Currency codes/names

United Kingdom

Pound Euro Japanese

Yen Swiss Franc US Dollar CFA Franc BCEAO

CFA Franc BEAC

Chinese Yuan

Renminbi

Ghanaian New Cedi

Hong Kong Dollar

Nigerian Naira Saudi Riyal

South African Rand

US Dollar Utd. Arab

Emir. Dirham

GBP 1 0.7915 0.005784 0.6514 0.5878 0.001207 0.001207 0.09547 0.174 0.07584 0.003662 0.1567 0.05591 0.5878 0.1601

EUR 1.2637 1 0.007309 0.8231 0.7427 0.001524 0.001524 0.1206 0.2199 0.09584 0.004627 0.1981 0.07065 0.7427 0.2022

JPY 172.913 136.845 1 112.633 101.632 0.2086 0.2086 16.5074 30.0842 13.1133 0.6331 27.1012 9.6677 101.632 27.6755

CHF 1.5354 1.2151 0.00888 1 0.9024 0.001853 0.001853 0.1466 0.2671 0.1164 0.005622 0.2406 0.08585 0.9024 0.2457

USD 1.7014 1.3465 0.009841 1.1083 1 0.002053 0.002053 0.1624 0.296 0.129 0.00623 0.2667 0.09512 1 0.2723

XOF 828.778 655.957 4.7934 539.853 487.104 1 1 79.117 144.189 62.8498 3.0344 129.891 46.3356 487.104 132.644

XAF 828.778 655.957 4.7934 539.853 487.104 1 1 79.117 144.189 62.8498 3.0344 129.891 46.3356 487.104 132.644

CNY 10.4833 8.2965 0.06063 6.8287 6.1615 0.01265 0.01265 1 1.8239 0.795 0.03838 1.643 0.5861 6.1615 1.6778

GHS 5.8181 4.6044 0.03365 3.7898 3.4195 0.00702 0.00702 0.5554 1 0.4412 0.0213 0.9118 0.3253 3.4195 0.9312

HKD 13.1872 10.4374 0.07627 8.59 7.7506 0.01591 0.01591 1.2589 2.2943 1 0.04828 2.0668 0.7373 7.7506 2.1106

NGN 278.565 220.456 1.6111 181.453 163.723 0.3361 0.3361 26.5924 48.464 21.1248 1 43.6584 15.5741 163.723 44.5836

SAR 6.3818 5.0505 0.03691 4.157 3.7508 0.0077 0.0077 0.6092 1.1103 0.484 0.02337 1 0.3568 3.7508 1.0214

ZAR 17.902 14.169 0.1035 11.6611 10.5217 0.0216 0.0216 1.709 3.1145 1.3576 0.06555 2.8057 1 10.5217 2.8652

USD 1.7014 1.3465 0.009841 1.1083 1 0.002053 0.002053 0.1624 0.296 0.129 0.00623 0.2667 0.09512 1 0.2723

AED 6.2508 4.9469 0.03615 4.0717 3.6738 0.007542 0.007542 0.5967 1.0875 0.474 0.02289 0.9797 0.3495 3.6738 1

MoSu101.5

102.0

103.0

102.5

103.5101.97

Tu We Th Fr

CLU4

Mo MoSu Fr3.700 3,080

3.750 3,115

3.850 3,185

3.800 3,150

3.900 3,2203.781 3.781

Tu TuWe WeTh ThFr Fr

NGQ4 CCU4

Unit 1 BarrelContract Size 1,000 Barrels52 wk Range 91.24 - 112.241-Year Return -3.34%Currency USD

Unit 1 MmbtuContract Size 10,000 MMBtu52 wk Range 3.129 - 6.4931-Year Return 3.76%Currency USD

Unit 1 Metric TonContract Size 10 Metric Tons52 wk Range 2265.00 - 3232.001-Year Return 36.24%Currency USD

Natural Gas F. US Cocoa F.Crude Oil F.

RESEARCH

REGULATION

COMMENTARIAT 7VM | Monday, July 28, 2014 | Issue 003

The end of cheap money for Zenith Bank?

Flash Crash on the NSE

Less than a year after it was rolled out, X-GEN, the trad-ing platform of the Nigerian Stock Exchange failed on Thursday, July 24. This was due to ‘network challeng-es’ according to Nwando Ajene, The Exchange’s head of corporate communica-tions. At its launch, the plat-form, which cost the $10 mil-lion was billed as ‘potentially the fastest in Africa.’

By afternoon the problem

was fixed but the damage had been done.

Stockbrokers have com-plained about the lost income and opportunities the crash caused investors. Average daily trading on the NSE ranges from N3 billion to N3.5 billion. This being the peak of the earnings season, a few have whispered that the crash may have been due to sabotage. A new dimension to conspiracy speculation

about possible causes was introduced by Sunny Nwo-su, national coordinator of the Independent Sharehold-ers Association of Nigeria (ISAN), who was reported to have threatened that ‘inves-tors would seek redress if the non-trading was as a result of power tussle by NSE manage-ment.’

Ade Ewuosho, the NSE’s head of market operations, explained that trading was extended from 2:30 p.m. to 3:15 p.m. to enable brokers make up for the lost time. The market needed no prodding. On Friday, investors traded a total of 453.1 million units of stocks worth N8.7 billion.

The inconvenient truth is that complex technology being complex technology would occasionally suffer out-ages of this kind. It is in the nature of the beast. The NSE deserves commendation for fixing the problem in record time.

Primus inter paresIn the past week the Nige-

rian Stock Exchange has re-leased a raft of new and draft rules for both dealing mem-bers and quoted companies. One of these, a Premium Board, deserves all the atten-tion it can receive. The idea is to create an aspirational list-ing category for companies that meet stringent corporate governance, capitalisation and liquidity standards. Re-quirements for eligibility in-clude a minimum score of 70 per cent on the NSE and the Convention for Business

Integrity’s Corporate Governance Rating Sys-tem (CGRS), have a consist-ent market capitalization that is equal to or in excess of $1 billion prior to admission to the Premium Board, and have a minimum free float of 20% or value of shares floated is equal to or above US$1 Bil-lion and the number of shares representing its issued share capital is equal to or above 10 billion unit. This would effectively create a new and visible set of NSE champions that would become its show-

case companies. It would also give investors the assur-ance of liquidity in addition to other benefits. However, three concerns are that these issuers may suck up all the liquidity in the market when they do offerings, it may lead to a discount for companies not on the Premium Board, and inversely, it could cause an undeserved premium, no pun intended, for those on it. This good initiative must not be allowed to turn into a case of the rich getting richer and the poor getting poorer.

CORPORATES

Investment Banking Outlook

On July 23, Toyin Sanni, managing director of UBA Capital, an investment bank, was a guest on CNBC Africa to discuss the outlook for invest-ment banking in the second half of 2014. When asked by CNBC’s Esther Ugbodaga to name the defining transac-tion of the first half she did not hesitate to mention Se-plat. The company raised $500 million in April in a dual Lagos-London listing. She opined that there would be interest in that kind of is-suance going forward.’ Her interviewer did not follow up

on this to allow her expatiate on exactly what kind of issu-ance she meant. Would the characterization be based on size, sector, dual listing, pedi-gree of sponsors, or assets? She did say that the market response was ‘very encourag-ing’.

She was cautious about investor appetite for new listings and thought it early to call an end to the drought of new issues. There are still concerns about the depth of liquidity on the NSE, and whether investors can soak up several issues at this time, she said. She was not con-vinced that investor apathy, especially among the general public has been overcome, al-though institutional investors are more enlightened.

Sanni was optimistic about the bill to compel companies to list on the NSE. This would create a queue of listings that would boost the market. She said the law would be ‘good

for the market, and a wel-come development.’

She was asked about the extent of contribution by Ni-gerian investment banks to infrastructure development. Right off the bat she respond-ed that they have ‘supported infrastructure development tremendously.’ She listed UBA Capital’s role in arrang-ing financing for the power sector privatization, and state governments as two areas where the firm’s efforts touch the lives of average Nigerian citizens. She did admit that there is still ‘a lot of room for investment banks to do more.’

In parting, the managing director said she was bullish about power, construction, real estate, and agribusiness. Each of these sectors, in her opinion, hold attractive op-portunities if companies and investors can navigate the challenges with the guidance of the right investment bank.

Toyin Sanni, managing director, UBA Capital

Like Christmas, everyone looks forward to earnings season with excitement, and like it, most people feel underwhelmed at the end of the day. According to Ayodeji Ebo, head of research at Afrinvest, ‘the second quarter earnings scorecards have been mixed overall with a few impressive performances.’

A few months ago, an exec-utive director at a second-tier bank quipped that the days of ‘advantageous funding by the golden three is coming to an end.’ Those three are First Bank, GT Bank, and Zenith Bank. It looks like his proph-esy is coming true. Analysts at Chapel Hill Denham write that while ‘a low fund-ing cost has historically been a major strength of Zenith, its first half results were chal-lenged by high funding cost.’ The bank’s funding costs has risen from 3.8 per cent in H1 2013 to 4.2 per cent in the latest reporting period. Add to this a ‘moderate op-

erating income growth’ and ‘concerns about the interest spread on the back of costly time deposits and borrowed funds.’ Its net interest spread was 5.6 per cent set against 6.6 per cent in the first half of 2013. The analysts rate Ze-nith Bank’s asset quality an A, describing it as ‘enviable, despite robust loan growth.’ While gross loans grew by 29.1 per cent, impairment charges fell by 18.3 per cent to N2.9 billion from N3.6 bil-lion in the same period last year. They place a HOLD recommendation on the bank’s stock, and set a target price of N25.17 on it.

Peter Amangbo, CEO, Zenith Bank

The shine, shine bobo maintains lustre

Analysts at Dunn Loren Merrifield write that Nige-rian Breweries fell short of the investment bank’s quar-terly sales forecast of N75.47 billion by 3.9 per cent. The drinks company reported figures of N72.52 billion in

its second quarter sales rev-enues, which is up 5.1 per cent on first quarter figures. One number to watch is the company’s rising cost of sales. The company in which Holland-based Heineken N.V. owns a 54.09 per cent

stake recorded a 5.8 per cent rise in cost of sales to N71.35 billion. One consolation is its efficiency drive is showing results. Operating expenses at the Iganmu-based com-pany increased by only 1.1 per cent.

The crystal ballOne week from now, FBN

Capital will publish its monthly Purchasing Man-ager Index (PMI). The in-dex, which is released at the beginning of each month, is an eagerly watched indica-tor of business and consumer confidence. The survey in-

dicates companies’ views on core variables in their business. Matched with the company results being re-leased it should give inves-tors a good idea of what to expect in the third quarter. Purchasing managers have three response choices to the

questionnaire: better, un-changed or worse than the previous month. Under the adopted methodology, 50 indicates a neutral reading. Higher scores suggest that the manufacturing economy is expanding.

Source: FBN Capital

FBN Capital Manufacturing PMI readings (50 = neutral)

30

40

Output Workforce New Orders Delivery Times

Stock of Purchases

50

60

70March 2014April 2014May 2014June 2014

EARNINGS GLANCE

RESULTS REVIEW8 VM | Monday, July 28, 2014 | Issue 003

TRANSNATIONAL CORPORATION OF NIGERIA PLC 6M:2014 Result - Financial Highlights (NGN Billion) Statement of

Comprehensive Income 6M2014 6M2013 Y-o-Y Growth FY2013

Gross Revenue 21.2 7.7 175.3% 18.8Cost of Sales (6.2) (1.7) 264.7% (4.4)Gross profit 15.0 6.0 150.0% 14.3

Other Operating Income

0.9 2.6 -65.4% 5.1

OPEX (7.8) (5.0) 56.0% (9.2)PBT 8.0 3.6 122.2% 9.0

Taxation (1.1) (1.1) 0.0% (2.0)PAT 6.9 2.5 176.0% 6.9

Per share data TRANSCORPCurrent Price 5.70Trailing EPS 0.29

Book Value Per Share 2.4Price multiples/Ratios

Shares Outstanding(bn)

38.7

Trailing P/E 19.5xP/BV 2.4x

RoAE (Annualised) 12.7%RoAA (Annualised) 7.3%Gross Profit Margin 70.8%

NET Margin 32.5%OPEX Margin 36.8%

Cost of Sales Margin 29.2%Leverage 2.1

Statement of Financial Position 6M2014 FY2013 Growth

Inventories 1.6 1.4 14.3%Trade and Other

Receivables24.2 8.4 188.1%

Cash and Cash equivalents

4.2 9.2 -54.3%

Total Assets 158.2 149.5 5.8%Total Equity 91.7 86.7 5.8%

Total Borrowings 43.2 43.1 0.2%Total Liabilities 66.5 62.8 5.9%

CEMENT COMPANY OF NORTHERN NIGERIA PLC 6M:2014 Result - Financial Highlights (NGN Billion) Statement of


Gross Revenue 9.4 8.8 6.6% 15.8 Cost of Sales (5.7) (5.7) -0.6% (10.8)Gross profit 3.7 3.1 20.1% 5.0


0.0 0.6 -95.0% 0.7

OPEX (1.4) (2.4) -43.2% (3.6)PBT 2.3 1.2 90.8% 2.0

Taxation 0.7 0.4 90.8% (0.6)PAT 1.6 0.8 90.9% 1.4

Per share data CCNNCurrent Price 13.27Trailing EPS 1.71



1.3






Inventories 6.5 6.0 7.5%Trade and Other

Receivables0.9 0.8 16.7%


2.5 1.1 124.8%

Total Assets 17.6 15.1 17.1%Total Equity 9.8 9.1 7.8%

Total Borrowings 1.0 0.9 23.4%Total Liabilities 7.9 6.0 31.4%

SEPLAT PLC 6M:2014 Result - Financial Highlights (NGN Billion)Statement of


Gross Revenue 60.3 65.1 -7.4% 137.1 Cost of Sales (21.9) (26.3) -16.7% (51.5)Gross profit 38.4 38.8 -1.0% 85.6


2.1 0.2 950.0% 0.4

OPEX (16.4) (6.4) 156.3% (14.7)PBT 24.2 32.7 -26.0% 71.2

Taxation - (14.4) -100.0% (14.4)PAT 24.2 47.1 -71.8% 85.7

Per share data SEPLATCurrent Price 675.05Trailing EPS 113.50



0.6






Inventories 10.0 3.7 170.3% 6.7Trade and Other

Receivables60.0 81.9 -26.7% 63.9


90.1 4.5 1902.2% 26.4

Total Assets 351.4 169.3 107.6% 202.6Total Equity 206.7 73.0 183.0% 111.5

Total Borrowings 97.6 46.5 109.8% 48.4Total Liabilities 144.7 96.3 50.3% 91.1

ZENITH BANK PLC 6M:2014 Result - Financial Highlights (NGN Billion) Statement of


Gross Earnings 184.0 171.0 7.6% 351.4 Interest Income 140.0 128.0 9.4% 260.1 Interest Expense (49.0) (37.0) 32.4% (70.8)

Net Interest income 91.0 91.0 0.0% 189.3 Impairment charge for

credit losses(3.0) (4.0) -25.0% (11.0)

Net Fees and Commission Income

26.0 24.0 8.3% 52.5


19.2 10.6 81.1% 22.7

OPEX (75.1) (70.4) 6.7% (147.2)PBT 57.9 54.1 7.0% 110.6

Taxation (10.4) (8.7) 19.5% (15.3)PAT 47.4 45.4 4.4% 95.3

Per share data ZENITHBANKCurrent Price 25.00 Trailing EPS 3.10

Book Value Per Share 15.7 Price multiples/RatiosShares outstanding(bn) 31.4


RoAE (Annualised) 19.4%RoAA (Annualised) 3.1%Net Interest Margin

(Annualised)8.6%

Cost of Funds (Annualised)

3.6%

Cost to Income 56.4%Loan to Deposit Ratio 60.1%

Net Margin 25.8%Statement of

Financial Position 6M2014 FY2013 Growth

Cash and Bank Balances 556.4 603.9 -7.9%Total Loans and

advances1,386.0 1,251.4 10.8%

Investment Securities 295.6 303.1 -2.5%Total Assets 3,203.8 3,143.0 1.9%Total Equity 492.4 509.3 -3.3%

Total Deposits 2,305.0 2,276.7 1.2%Borrowings 142.1 60.2 136.0%

Total Liabilities 2,711.4 2,633.9 2.9%

STANBIC IBTC HOLDINGS PLC 6M:2014 Result - Financial Highlights (NGN Billion) Statement of


Gross Earnings 61.5 54.5 12.8% 111.2 Interest Income 34.0 30.3 12.2% 62.6 Interest Expense (11.0) (12.4) -11.1% (25.6)

Net Interest income 23.0 17.9 28.4% 37.0 Credit impairment

charges(1.4) (2.4) 59.6% (2.7)

Non-Interest Income

27.3 24.1 13.3% 48.2


0.2 0.3 -34.8% 0.4

OPEX (29.2) (26.5) 10.2% (57.9)PBT 19.6 13.1 49.6% 24.6

Taxation (3.7) (2.9) 27.1% (3.8)PAT 15.9 10.2 55.9% 20.8

Per share data STANBIC Corporate ActionsCurrent Price 27.50 Proposed Dividend N1.10Trailing EPS 2.65

Book Value Per Share 11.2 Dividend Yield 4.0%Price multiples/RatiosShares outstanding(bn) 10.0



(Annualised)5.4%

Cost of Funds (Annualised)

4.7%




Cash and Bank Balances 167.3 120.3 39.1%Total Loans and

advances351.0 383.9 -8.6%

Investment Securities 330.6 206.2 60.3%Total Assets 906.8 763.0 18.8%Total Equity 112.3 97.6 15.1%

Total Deposits 554.4 468.0 18.5%Borrowings 63.6 48.8 30.3%

Total Liabilities 794.5 665.4 19.4%

STERLING BANK PLC 6M:2014 Result - Financial Highlights (NGN Billion) Statement of


Gross Earnings 48.7 41.9 16.2% 91.6 Interest Income 37.4 31.1 20.3% 70.0 Interest Expense (16.2) (15.9) 1.9% (34.1)

Net Interest income 21.3 15.2 40.1% 35.8 Credit impairment

charges2.4 1.1 218.2% (8.3)

Non-Interest Income

na na na


11.3 10.8 4.6% 21.7

OPEX (23.8) (18.5) 28.6% (39.9)PBT 6.3 6.2 1.6% 9.3

Taxation (0.8) (0.3) 166.7% (1.0)PAT 5.5 5.9 -6.8% 8.3

Per share data STERLNBANKGross Earnings 48.7 Interest Income 37.4 Interest Expense (16.2)

Price multiples/RatiosShares outstanding(bn) 21.6



(Annualised)6.1%

Cost of Funds (An-nualised)

6.1%




Cash and Bank Balances 183.4 193.1 -5.0%Total Loans and

advances321.8 321.7 0.0%

Investment Securities 192.4 167.0 15.2%Total Assets 731.1 707.8 3.3%Total Equity 63.8 63.5 0.5%

Total Deposits 556.3 570.5 -2.5%Borrowings 60.2 43.4 38.7%

Total Liabilities 667.4 644.3 3.6%

COMPLIANCE

BUSINESS 9VM | Monday, July 28, 2014 | Issue 003

Soji Apampais the co-founder of The Con-vention on Business Integrity, which sponsors the Corporate Governance Rating System in partnership with the Nigerian Stock [email protected]

orporate govern-ance is at the heart of how businesses are

run. According to the Organi-zation for Economic Coop-

erative Development (OECD), ‘corporate governance in-volves a set of relationships between a company’s man-agement, its board, its share-holders and other stakehold-ers’. Corporate governance, broadly speaking, includes board efficiency, transpar-ency, reporting requirements, investor communications and sustainability.

Corporate governance standards in an organization are typically based on macro factors at play in the country where it operates. These include the country’s legal and financial system, ownership structures, and cultural, economic and political realities. In Nigeria, where corruption is rife and endemic, corporate governance practices are usually lax. However, current economic realities like the globalization of capital

flows has rendered ethical relativism, the doctrine that morality exists in relation to culture or society, an unsound basis for setting corporate governance standards. Nigerian companies must decide if they want corporate governance standards that lie in the eye of the beholder or those that lie in the eye of any beholder?

There are a good number of reasons why Nigerian compa-nies need to upgrade the ba-sis of their corporate govern-ance standards to match good international practice.

First, because of the high cost of capital in Nigeria, companies that seek to com-pete on a larger scale are seeking capital from foreign capital markets or through the participation of interna-tional investors in local mar-

kets. Given the mainstream-ing of corporate governance issues, financial markets all over the world have instituted either mandatory or recom-mended codes to guide the conduct of publicly quoted companies.

Till date, there are 7 Ni-gerian companies listed on the London Stock Exchange. Although some are on the Al-ternative Investment Market (AIM), the LSE’s growth mar-ket, which has fewer guide-lines, those companies who wish to be listed on the Main

Market, must comply with stricter admission and disclo-sure standards. Seplat, the oil company, which went public in May has successfully done so. Companies with aspira-tions to list there are also re-quired to comply with the UK Corporate Governance Code or explain why they do not. Failure to do so invites vari-ous sanctions. Therefore, to compete globally and attract the quantity and quality of capital they require to operate at that level of market access, Nigerian companies need to adopt more stringent stand-ards of corporate governance than the domestic environ-ment necessitates. Good cor-porate governance practices demonstrates to global inves-tors that their investments will be safe and managed in their best interest.

It is not only the big com-panies that can benefit from adopting good and interna-tionally acceptable corpo-rate governance practices. Small- and medium-sized enterprises (SMEs) stand to benefit as well. For example, it can win them entry to the value chain of multinational companies or even big local companies that demand simi-lar standards from their busi-ness partners. For example, it will constitute a reputational risk for a big international brand like Shoprite, which

just opened its 1oth Nigerian store in Ibadan, to associate with suppliers that do not have clear reporting and good management practices. Sup-pliers that pose reputational risks to their brands and eth-ics are unwelcome. In an age when the Internet and social media rule, the reverbera-tions from one critical tweet or negative online review in Lagos or Lusaka can be felt in London.

Furthermore, organiza-tions need to practice good corporate governance to guard against other risks that threaten the going concern of the organization. Such risks include the liability or as-set damage that may occur if managers enter into transac-tions that are self-serving and destroy the value of share-holders’ equity. In extreme

cases, it could lead to a loss of trust from customers that may lead to product boycotts and in the case of a bank, a run. Setting high governance standards is a business sus-tainability necessity because even codified global corpo-rate standards usually consti-tute the minimum acceptable standard and may be insuf-ficient.

In sum, good corporate governance is germane to the going concern of an organi-zation because it determines the strategic direction of the firm in terms of the mis-sion and values, culture, risk management and processes. Businesses in Nigeria have to move beyond mouthing the buzzword of corporate gov-ernance to adopting sound corporate governance prac-tices. It makes good business sense to do so. ;

GOVERNANCE

Businesses in Nigeria have to move beyond mouthing the buzzword of corporate governance to adopting sound corporate governance practices. It makes good business sense to do so.

The Corporate Governance Imperative

Next question please. Alhaji Aliko Dangote beckons for questions at the 8th AGM of Dangote Sugar Company Plc.

Central banks are clamping down on financial institutions that abet money laundering.

Cone of her last acts as the acting gover-nor of the Central

Bank of Nigeria, Dr. Sarah Alade directed all banks and discount houses in the country to ensure that no chief compli-ance officer is below the grade of general manager. The apex bank also insisted that the of-ficer who heads the function reports to the institution’s board with dotted lines in the org chart to the chief execu-tive. On July 21, the Nigerian Stock Exchange also issued its Rules Governing Compliance Officers at Dealing Firms. It asked stock broking firms to ‘sufficiently empower Com-pliance Officers and prescribe ways of ensuring that they are adequately protected to effec-tively carry out their duties.’

These point to a recognition that the role of compliance chief requires both technical credibility, and importantly, managerial seasoning that only experience, and seniority within organization can con-fer. There is no use appointing novices who lack the organiza-tional clout to command the CEO’s attention.

A general description of the responsibilities of compli-ance departments would fall into three categories namely the identification and analysis of rules guiding the financial institution’s operations, the design and implementation of adequate controls to ensure compliance with extant rules, and finally, oversight functions as regards the effectiveness of controls-in-place. The main fo-cus of the compliance function is to ensure that banks, dis-count houses, issuing houses and stock broking firms do not serve as conduits for ill-gotten funds, and monies intended for anti-social purposes.

It is naïve to think that the grade of general manager by itself would give CCOs the le-gitimacy and authority to sway corporate behaviour. It is vital that in the upper echelons of these financial institutions

the compliance, risk manage-ment, and control functions receive sufficient resources to perform their jobs without let or hindrance, and that their authority is enshrined in the corporate structure.

According to Donna Boe-hme of Compliance Strate-gists, ‘just throwing the CCO out there with a badge and a title is not enough to make a programme work. The busi-ness will not simply ‘get in line’ just because the CCO asks it to do so. Boards and senior management need to take fur-ther action to empower their CCOs and programmes, and part of that is realising that the business ‘owns’ compliance, not the CCO.’

This is true. Of equal impor-tance as the officer’s grade is the budget at his disposal and the staffing of the department. In Europe, for example, Andy Haldane, head of financial sta-bility at the Bank of England, has estimated that banks in the EU area will need to go on a hiring spree to the tune of 70,000 new jobs to meet the demands of Basel III. Generals need foot soldiers to prosecute wars.

Weak compliance can be ru-inously expensive. In the US, JP Morgan has been fined $20 billion in the past year alone for various infractions, and only last month, Credit Suisse was penalized with $2.5 billion for straying from the law in the tax shelters it set up for its wealthy clients. BNP Paribas SA, the French bank has been fined $8.9 billion for breaking U.S. trade sanctions on Cuba, Iran, and Sudan. These are not mere slaps on the wrist.

Therefore, it comes as little surprise the importance that the Nigerian central bank and NSE are attaching to compli-ance, and those charged with discharging roles in that func-tion. It does remain to be seen whether these institutions will follow both the letter and the spirit of the law in the altitude and latitude given CCOs. ;

Compliance moves to centre stage

In

Source: thesecuritiesedge.com

size of the Nige-rian market and its economic potential

is palpable. One index of ris-ing affluence is the domestic consumption of Scotch whisky. According the Scotch Whisky Association, exports to Nigeria increased by 43% in 2013. This demand is attributed to a grow-ing and sophisticated middle class. Last year, sales of Scotch whisky generated almost $6 billion dollars in revenue from

imports. These figures sparked my curiosity about Scotch and other types of whiskies piques.

I have always associated Scotch whisky with success. An investment banker friend used to recount stories of deal clos-ings celebrated by drinking rare bottles of Scotch. But until re-cently, my knowledge was lim-ited to the odd bottle of Johnnie Walker in the cupboard of most Nigerian homes. I was familiar with brands like Dewars, Glen-morangie and Glenlivet that have made efforts to increase their visibility in Nigeria. I have since learnt that there are many varieties of Scotch. For as many varieties are there are of Scotch whiskies there are dif-ferent tastes and preferences by drinkers. My journey to unlock the mysteries of Scotch’s appeal is an adventurous one.

For starters, I will demystify the terms. We have all heard of whisky, Bourbon, and Scotch. An American friend, who is a whisky enthusiast helped me draw the distinctions. I en-listed him as my first tutor. He explained that whisky is the collective term for Bourbon,

Scotch, Canadian rye, and Irish whiskey. It is an alcoholic bev-erage distilled from fermented grain mash that has been aged in wooden casks. Each type of whisky differs in its produc-tion. Bourbon, for example, is distilled from corn mash and largely associated with the US state of Kentucky. A famous but reluctant brand of bourbon is Jack Daniels. I deduce its reluctance because the Brown-Forman Corporation, owners of the label, refuse to market it as bourbon. Instead, they main-tain that it is ‘Tennessee Whis-ky’. Here is an interesting fact. Jack Daniels is manufactured in Lynchburg, Moore County, Tennessee. This is one of the few ‘dry counties’ in the United States, a relic model of the Pro-hibition era. Most towns in the US are ‘wet’ due to the Twenty First Amendment repeal in the country’s Constitution. There-fore, even though the county manufactures a healthy propor-tion of the Bourbon consumed in the US, drinkers cannot buy Jack Daniels in the county where it is produced. My tutor finds this irony hard to contain

and bursts into extended fits of laughter at the retelling. I con-clude that his whisky consump-tion aids in the longevity of his laughter.

After learning about Bour-bon, I move on to Scotches, the reason I am writing this article. As mentioned earlier I have never really been a spir-its drinker. To fill the void of knowledge I surround myself with the most passionate peo-ple on the subject to get a better insight.

None are more passionate than the Scots. An invitation to the Lagos Caledonian Soci-ety’s Chieftain’s Ball gives me the opportunity to investigate further. Here I find my second tutor. A little background of the Caledonian Society Balls is in order. The Society holds three balls each year. These are considered the cornerstone of the expatriate social scene in Lagos. The Chieftain’s Ball is the least attended because it falls during the summer vaca-tion when most families are away on holiday. This works in my favour because my tu-tor while waiting for guests

to turn up spends a dispro-portionate amount of time teaching me about Scotch. He takes pride in explaining that Scotch is more regulated than champagne. It turns out that he is correct evidenced by the Scotch Whisky Regulations 2009. My tutor explains that Scotch whiskies are mostly made from malted barley. He pours a ‘wee dram’ of whisky puts in a few drops of water to “unlock the flavor” and further explains the difference be-tween single malt scotch whis-ky and blended grain scotch whisky, offering me a single malt scotch to sample. Actu-ally, I sample three: Glenlivet (18-year old), followed by a sip of Bowmore (12-year old), and

topped off by a sip of Glenmo-rangie (12-year old). The key distinctions between the three are negligible to my developing palate. The clearer distinction is between the single malt and blended grain Scotch whisky which is less intense and prob-ably more commercial.

At the end of his tutelage, he and his wife begin another session and teach us different Scottish reels (group dances). Nearly all invited guests par-ticipate in this. After the Gay Gordons, a popular Highland dance, I summarize that reeling and scotch are not necessarily the best combination and retire early eager to write this article. This water of life literally took the life out of me. ;

ART AS AN ALTERNATIVE INVESTMENT

EDITOR: MIDENO BAYAGBON

GROUP BUSINESS EDITOR: OMOH GABRIEL

CONTENT DIRECTION: OBIORA TABANSI ONYEASO

DESIGN & ILLUSTRATION: PUBLICAN MEDIA

Vanguard Markets features unbiased, in-depth coverage of corporate and market developments across a wide range of business sectors.Every week, Vanguard Markets delivers essential business analysis and commentary on Nigerian companies, regional economies, and global markets. Vanguard Markets is published by Vanguard Media Limited in associa-tion with Customs Street Advisors Limited, a specialist communications consultancy.

Vanguard Media Limited, Vanguard Avenue, Kirikiri Canal, P.M.B.1007, Apapa.

Website: www.vanguardngr.com

ISSN 0794-652X

Published by

In Association With

is no longer news that photography has become an acceptable

and collectable genre of the vis-ual arts, thus overcoming the skepticisms that it is created by mechanical means and easily replicated, underscoring issues of exclusivity. African photog-raphers continue to be at the center of global attention with

their works featuring promi-nently at notable international fairs and in exhibitions at ma-jor museums.

Recently on view at leading London-based auction house, Bonhams, is The Nigerian Centenary Photography exhi-bition, dedicated to celebrated Nigerian photographer, ‘Okhai Ojeikere who passed on early this year. Indeed, several in-ternational auction houses fea-ture prominently, modern and contemporary African photog-raphy through the work of ear-ly pioneers like Malick Sidibe’, Seydou Keita and Ojeikere, as well as mid-career artists and emerging names such as Raphael Leonce Agbodjelou, Mario Macilau, Gideon Men-del, Sammy Baloji, Samuel Fosso, George Osodi, Uche James-Iroha, Ade Adekola and Francois-Xavier Gbré. In October 2012, prestigious Brit-ish auction house, Christies, in its Paris auction themed Rendez-vous Interieurs con-

temporains included a work by Sidibé from Mali, Le deux amis (1971) which was sold for €3,250 from a starting esti-mate of € 2,500.

This article sheds light on this growing interest in pho-tography as a collectable me-dium with particular focus on Africa. Many experts advise that now may be a good time to collect photography from the continent as the success of the market may be attributable to its affordability and undervalu-ation.

The Auction Room is an online auction house based in London. An analysis of its Oc-tober auctions of contempo-rary African art reveals that the majority of lots entered were sold approximately 20% above their initial estimates. This in-cludes notable photographs like; A Woman Recovers Building Materials from Her Shack That Had Been Burnt Down the Previous Day (1986) by South African artist, Gideon

Mendel with a pre-sales esti-mate of £2,000 that was sold for £2,350; Hercule Africain (1970) by Sidibé with a pre-sales estimate of £2,000 and sold for £2,233; and A Young Girl with Toy (2011) by Mario Macilau from Mozambique, estimated at £1,000 and sold for £1,310. This continued suc-cess of African photography on the international market has led to the establishment of the world’s first African Contem-porary Photography Auction by the auction house.

Arguably, photography’s first inclusion on the Nigerian secondary market was at the Arthouse Contemporary sale in Lagos of May 9, 2011, where the single work sold, Argungun by George Osodi fetched the sum of N605, 000 ($ 3,781.25). The November 21 sale, the same year also featured photography with 3 works offered. Again, a single work, Beating Room by Adolphus Opara was sold for N396,000 ($ 2,475).

With a 100 per cent success sales rate, the May 2012 sale is perhaps Arthouse’s most successful inclusion of pho-tography till date. The 6 works offered realized a total sum of N3,740,000($23,375) with the top-selling photograph on the evening, Adekola Adeleke’s The Charge, sold for N2,200,000 ($13,750), establishing a re-cord for the artist. Yetunde Babaeko also set a personal record at N220,000 ($1,375), with The Pretty Stranger Who Killed the King I, selling above a pre-sale estimate of N150,000-N180,000 ($ 937.5 -1,125).

The November 2012 auction by Arthouse Contemporary recorded a dip in sales from photography as only N2, 123,

000 ($13,268.75) was achieved with a 50 per cent success rate as only 4 of the 8 works offered sold. The highest sold photo-graph was George Osodi’s Eyo at N1,320,00 ($8,250) which established an individual best.

However, the auction house’s sale of May 13, 2013 recorded another 100% sale. The 3 con-temporary photographs of-fered, collectively achieved N3,366,000 ($21,037.50, in-cluding premium) against a pre-sales estimate of N2,280,000-2,920,000 ($1,425-1,8250).

Hopefully, these early suc-cesses recorded for photogra-phy will boost confidence in collectors to accept the me-dium’s potential investment value. ;

The growing market for African photography

A Young Girl with Toy (2011) by Mario Macilau from Mozambique

Macallan makes some of the most storied single malt Scotch whiskies

ARENA10 VM | Monday, July 28, 2014 | Issue 003

Oliver Enwonwuis the director of leading Lagos gallery, Omenka and president of the Society of Nigerian [email protected]

It

HIGH TABLE

Ify Ojiis a lawyer, writer and food lover. She is the creator of the GidiTang.com (synonym: Lagos Flavour) blog on food and drink in Lagos. [email protected]

Tastes like success

The

Source: Rockstarcocktails.com

vanguard markets, july 28, 2014 edition

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