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Monday, 8 September 2014
Nigeria: Defaulting Companies Scamper To Beat Deadline
Ahead of the deadline given by the Nigerian Stock Exchange (NSE) to defaulting quoted companies to comply with its post-listing requirements, LEADERSHIP findings has shown that only one of the companies had complied while the others are scampering to beat the deadline.
In June 2014, the NSE indicated its intention to delist 21 companies for failure to comply with post-listing requirements and gave them a three-month statutory notice, up until September 24, 2014, to comply or be delisted.
A source within the NSE confirmed that the affected companies are running and tidying their books to beat the deadline.
LEADERSHIP also said that the companies are seeking for the extension of the deadline to avoid being delisted from the exchange. Out of the 21 affected companies, FTN Cocoa and Daar Communications have come out with their results as at September 5, 2014. According to FTN Cocoa’s audited result for December 31, 2013, the revenue rose by 77 per cent to N491.90 from N278.17 in 2012. Its loss after tax dropped by 29 per cent, from a loss of N405.98 in 2012, to N286.08, while its earnings per share stood at a negative of 13 kobo from 18.45 kobo.
Daar Communications released its year ended December 2012 result, posting a revenue of N4.23 million from N5.14 million in 2011, while its profit after tax dropped to N273,878 from N2.69 million in 2012. A look at some of the affected companies showed that their inability to comply could be due to the difficult operating environment.
A breakdown of the companies showed that 16 would be delisted for filing infractions while the remaining five will be delisted for failure to regularise their listing status after being given time to do so. Those to be delisted for failure to file their financial statements include Investment and Allied Insurance (IAI), Goldlink Insurance, Pinnacle Point Group, Adswitch, Afroil, Rokanna Industries, IPWA, West Africa Glass Industry, Nigeria Wire and Cable, Starcomms and Daar Communications Plc. Others are Mtech, Big Treat, G.Cappa and UTC Plc, while the other companies being delisted for failure to regularise their listing status are Jos International Breweries (JIB), Golden Guinea Breweries, Stockvis, Capital Oil and Nigeria Sewing Machines Plc.
Speaking recently, the chief executive officer (CEO) of the NSE, Oscar Onyenma, said, “The NSE listing standard must be complied with by quoted companies.” He stated that this notice would send the message that the exchange is serious about post-listing requirement for companies and as such put them on their feet.
Meanwhile, shareholders of the companies marked for delisting have kicked against the move, saying that the non-submission of quarterly or yearly financial accounts by quoted companies could be a ploy by those that want to exit the market to force the NSE to delist them on its own, thereby escaping the rigours of the delisting process which they claim is cumbersome.
Recently, speaking to the media, the president of Avid Shareholders Association, Mr Abayomi Obabolujo, said, “The stock exchange cannot be talking from two sides of its mouth. They keep saying that they want to deepen the market by looking for more companies to list but at the same time, they are also quick to delist the existing ones for one reason or the other.
“In my opinion, I think that what they should rather do is to look for a better method of making those companies comply. They should rather work with the shareholders and the Securities and Exchange Commission (SEC) to determine what could be done to ensure that the bad management and board members of the non-performing companies are removed so that the companies can still continue to operate.
“What I am saying is that there is need for the NSE to call an all parties meeting which will provide a broad based discussion. You cannot just sit in your office and say because these companies have not submitted their reports, they will be delisted. No, if you consult the shareholders, you might, at the end of the day, be able to remove certain people from the board of directors of those companies.”